


■ 



*"; 



■ I 



■ \ 



*»y\ 



V 






.<*;-/• 



H 



/ 

7*7 



THE ABOLITION OF 
POVERTY 

BY 

JACOB H. HOLLANDER, Ph.D. 

Professor of Political Economy in the 
Johns Hopkins University 




BOSTON NEW YORK CHICAGO 

HOUGHTON MIFFLIN COMPANY 

(g&e $itoet£it>e ybxz$$ Cambridge 

1914 



V 
,11* 



7% 



COPYRIGHT, 1914, BY JACOB H. HOLLANDER 
ALL RIGHTS RESERVED 

Published October IQ14 



CAMBRIDGE . MASSACHUSETTS 
U . S . A 



NOV -2,9,4 M O.Jj- 

©GLA388188 

bUQ f 



PREFACE 

The purpose of this little essay is to set forth 
the needlessness of poverty. Like preventable 
disease, economic want persists as a social ill 
only because men do not desire sufficiently that 
it shall cease. There is still much mumbling of 
old commonplaces, and it has seemed worth 
while to emphasize anew this definite corollary 
of modern political economy, that the essential 
causes of poverty are determinable and its con- 
siderable presence unnecessary. 



CONTENTS 

I. The Nature of Poverty i 

II. The Social Surplus • . . . 18 

III. The Distribution of Income . . .34 

IV. The Rate of Wages .... 46 
V. The Underpaid 65 

VI. The Unemployed 79 

VII. The Unemployable 93 

VIII. Conclusion 106 

Notes 115 



THE ABOLITION OF 
POVERTY 

CHAPTER I 

THE NATURE OF POVERTY 

Social unrest is the keynote of twentieth- 
century life. The disquiet shows itself in unmis- 
takable ways: the ferment of industrial classes, 
the realignment of political parties, the sensitive- 
ness of public opinion, the intentness of economic 
inquiry. Such malaise is neither local nor tran- 
sient. Every modern state exhibits its presence; 
each month discloses its greater intensity. For 
this impressive phenomenon a single cause is ac- 
countable. Specific conditions of time and place 
affect the degree of unrest, and influence the 
mode of expression. But the primary force is 
everywhere the same — the presence and sting 
of poverty. This is the heart and center of social 
disturbance. 

Clear thinking, here as so often in social dis- 
cussion, is impeded by the vagueness of terms. 
The word " poverty " is, in ordinary usage, applied 



2 THE ABOLITION OF POVERTY 

indifferently to three distinct conditions: (a) eco- 
nomic inequality, (b) economic dependence, and 
(c) economic insufficiency. A man is said to be 
poor in mere contrast to his neighbor who is rich ; 
this is economic inequality. Almshouses and pub- 
lic relief minister to those who in the eye of the 
state are poor; this is economic dependence. 
Midway between the modestly circumstanced and 
the outright dependent are the poor in the sense 
of the inadequately fed, clad, and sheltered; this 
is economic insufficiency. 

More precise terminology is possible. The con- 
dition of those who are in chronic need of public 
aid or private relief to maintain physical existence 
is described more accurately as pauperism. It is 
so obviously misleading to use " poverty" as a 
mere correlative of riches that everyday speech 
in this connection ordinarily replaces the sub- 
stantive by some indirection, as the " poorer 
classes." Eliminating pauperism and modest 
circumstance, the terms "poor" and "poverty" 
remain to be properly applied to those who com- 
monly lack some considerable part of the eco- 
nomic goods and services necessary for decent 
and wholesome life. 

The problems of pauperism and of economic 
inequality are definite and familiar. Their mod- 
ern phase is, indeed, notable less for new extent 
or greater difficulty than for changed social atti- 



THE NATURE OF POVERTY 3 

tude. As to economic inequality, the world is not 
greatly concerned that certain of its citizens are 
much better supplied than others and that these 
in turn are more adequately provided than many, 
— so long as the least favorably circumstanced 
have enough for a well-ordered life. The anti- 
social methods whereby great fortunes are often 
amassed and preserved, — illegal privilege, preda- 
tory acquisition, exploitative use, — rather than 
the fortunes themselves, excite popular resent- 
ment. This irritation is aggravated by glaring 
examples of wasteful dissipation or vicious con- 
sumption of great possessions. Riches, as such, 
thus become the target for attacks really justified 
by ill-gotten or ill-used riches. Against that 
wealth which represents individual superiority — 
"skill, dexterity, and judgment" in the phrases 
of an old writer * — there is no social protest, any 
more than there is concern for the mere distance 
by which the well-fed hindmost is surpassed in 
the economic contest. 

Pauperism — the pathological disorder of the 
social body — presents obvious and long-stand- 
ing evils. In every community neglected disease, 
infirmity, widowhood and orphanhood, feeble- 
mindedness, insanity, physical or mental degen- 
eracy, delinquency, criminality have economic 
counterpart in complete or partial dependence. 
But these misery-attended wastes are being 



4 THE ABOLITION OF POVERTY 

treated with an intense energy that compares 
with the finest effort in the parallel field of medi- 
cal endeavor. There is a pitiful smallness in what 
has been done, measured by the immensity of 
what remains ; but the vista is neither boundless 
nor hopeless. An aroused social consciousness is 
extending effort from positive care to preventive 
foresight, and placing limit to the increase of 
pauperism as social disease. In the interim, 
twentieth-century humanitarianism, finding ex- 
pression in greater public undertakings and in 
more wisely directed private energies, seeks to 
meet existing dependence in a new spirit of com- 
munal responsibility and social conservation. 

It is poverty in the sense of economic insuffi- 
ciency — its wide extent, its assumed necessity, 
its tragic consequence — that forms the real 
problem. There are great bodies of people in 
country and in city who from birth have less than 
enough food, clothing, and shelter; who from 
childhood must toil long and hard to secure even 
that insufficient amount; who can benefit little 
from the world's advance in material comfort and 
in spiritual beauty because their bodies are 
under-nourished, their minds over-strained and 
their souls deadened by bitter struggle with 
want. These are the real poor of every commun- 
ity — the masses who, not lacking in industry 
and thrift, are yet never really able to earn 



THE NATURE OF POVERTY 5 

enough for decent existence and who toil on in 
constant fear that bare necessities may fail. 2 

Neither racial qualities nor national character- T 
istics account for the presence of such poverty. | 
It persists as an accompaniment of modern eco- n 
nomic life, in widely removed countries among J \ 
ethnically different peoples. It cannot be identi- 
fied with alien elements in native race stocks. 
Countries which have for generations been rela- 
tively free from foreign influx and have devel-j 
oped industrialism from within exhibit the same \ 
phenomenon of economic want. Wholesale im- 
migration is likely to be attended by urban con- 
gestion and industrial exploitation, but these are 
supplementary phases of the problem of poverty. 
Even in the United States, where immigration 
has attained proportions unexampled in the 
world's history, there is no reason to believe that 
such influx — bearing in mind the part it has 
played in creating and enlarging industrial op- 
portunity — has permanently affected the con- 
dition of poverty. 

Appalling in its own misery, this mass of pov- 
erty takes on even greater significance as the sup- 
ply source of pauperism. Not only is the interval 
between insufficiency and dependence at all times 
narrow, but the inability to provide against mis- 
hap or calamity, indeed, the very conditions of 
body and mind which grow out of under-nourish- 



\ 



6 THE ABOLITION OF POVERTY 

merit and overcrowding make fatally easy the 
transition from self-support to dependence. Pov- 
erty has thus been likened to a treacherous foot- 
path encircli*- j the hopeless morass of pauperism. 
Those who tread it are in constant danger, even 
with the exercise of care and foresight, of falling 
or of slipping or of being crowded off. This inse- 
cure foothold, once lost, is not likely again to be 
regained; the fallen are added to the wretched 
body of chronically dependent. 

The probable amount of such poverty is as im- 
pressive as its evident quality. In the unfortun- 
ate absence of any direct enumeration, recourse 
must be had to reasonable computation. The 
remarkable study of the nature and extent of 
poverty in the United States, made by Robert 
Hunter ten years ago, and still the only service- 
able survey of the subject, set forth that, in the 
industrial commonwealths of the United States, 
probably as much as 20 per cent of the total 
population are ordinarily below the poverty line. 
If one half of this estimate be applied to the other 
commonwealths, the conclusion is that in fairly 
prosperous years "no less than 10,000,000 per- 
sons in the United States are in poverty." In this 
computation a purely physical standard — "a 
sanitary dwelling and sufficient food and cloth- 
ing to keep the body in working order " — define 
the poverty line, with no monetary allowance for 



THE NATURE OF POVERTY 7 

intellectual, aesthetic, moral, or social require- 
ments. 3 

Hunter's estimate seemed at the time incred- 
ible, even though the aggregate included 4,000,- 
000 persons dependent upon some iorm of public 
relief; but the computation was in harmony with 
the investigations of Booth in East London and 
with the inquiry of Rowntree in York. It has not 
only since maintained itself against any serious 
challenge, but it has found confirmation in other 
accredited studies of living conditions in this 
country and abroad. 

One of the most recent, as well as most instruc- 
tive, of such investigations was made in the au- 
tumn of 19 12 into the general economic condi- 
tions of the working-class of Reading, England, 
by the statistical method of sampling. 4 Accepting 
a carefully determined minimum standard for 
food, clothing, and other purchases barely suffi- 
cient to keep workers efficient and dependents 
nourished, it was found that from 25 to 30 per 
cent of the working-class population of Reading 
were, in 1912, so far as they werd dependent upon 
earnings, pensions, or possessions, below this min- 
imum standard. Further, it appeared that more 
than half of the working-class children of Read- 
ing, during &ome part of their first fourteen years, 
lived in households where the standard of life in 
question was not attained. Not all the towns of 



8 THE ABOLITION OF POVERTY 

the United Kingdom would afford so depressing 
an exhibit. But making all reasonable allow- 
ance, Mr. Bowley reached the conclusions that 
somewhat over 13 per cent of the industrial 
working-class population of Great Britain are 
below the standard at any one time, as compared 
with 15.5 per cent in York and 25 to 30 per cent 
in Reading; that a very much larger proportion 
of families pass below the Standard at one time or 
another, and that the proportion of children af- 
fected is much greater than the proportion of 
adults. 

The available evidence as to the distribution of 
incomes, as compared with the cost of living, in 
the United States, gives similar results. The 
analyses of Mr. F. H. Streigh toff 5 show that in 
1904, and probably at the present time, some- 
thing over 60 per cent of the males sixteen years 
of age and over, employed in manufacturing, 
mining, trade, transportation, and other indus- 
trial occupations were earning less than $626 per 
annum; about 30 per cent were receiving from 
$626 to $1044; but that only 10 per cent had in- 
comes of at least $1000. If those employed in 
agricultural pursuits be included, the figures 
change to 65 per cent in the less than $626 group, 
27 per cent in the $626 to $1044 group, and 8 per 
cent in the more than $1000 group. Upon the 
highly improbable assumption that all men en- 



THE NATURE OF POVERTY 9 

gaged in gainful occupations, but not included in 
the above, were in 1904 receiving $12 per week or 
more, it would appear that fully one half of the 
adult males engaged in gainful occupations in the 
United States are earning less than $626 per 
year. 

Such evidence as is available as to the cost of 
maintaining a decent standard of living in the 
United States indicates that — measured by 
minimum requirements of food, clothing, shelter, 
and miscellaneous expenditure for an average 
family of father, mother, and three children un- 
der fourteen years of age — an annual income of 
$600 to $700 is insufficient; that $700 to $800 re- 
quires exceptional management and escape from 
extraordinary disbursements consequent upon ill- 
ness or death ; and that $825 permits the mainten- 
ance of a fairly proper standard. 6 It is likely that 
this does not even attain what has been consid- 
ered "a living wage in America"; that is to say 
"the minimum upon which an ordinary Ameri- 
can household may be maintained ... so 
as to provide not only for physical necessities, 
but for the education of the children, and for 
a fair degree of comfort, a fair share in the re- 
creations, church support, and other activities 
of the community, provision through insurance 
for death, injury, and sickness, and a compe- 
tence for old age." 7 



io THE ABOLITION OF POVERTY 

Specifically, it appears that of families with 
incomes between $700 and $800, 30 per cent are 
underfed, 52 per cent are underclothed, 58 per 
cent are overcrowded, 14 per cent are both under- 
fed and underclothed, 19 percent are both un- 
derfed and overcrowded, and 35 per cent are both 
underclothed and overcrowded. 8 These data were 
collected in 1907 and are applicable primarily 
to industrial cities of size in the United States. 
But their wider use is warranted by the fact that 
relative prices in the United States, weighted 
according to the average consumption of food 
in workingmen's families, have increased from 
125.9 in 1907 to 163.4 in I 9 I 3? or 2 9-7 P er cent. 9 
The only statistical materials available as to 
the increase in wages are the union scales of 
wages and hours of labor prevailing on May 15 
each year from 1907 to 191 3 in the principal 
mechanical trades in forty important industrial 
cities in the United States, as collected by the 
United States Bureau of Labor Statistics. The 
increases in wages from 1907 to 19 13 have been 
materially less than the increase in retail food 
prices, being in the case of representative well- 
organized trades as follows: bricklayers, 5 per 
cent; granite-cutters, 7.3 per cent; machinists, 
8.3 per cent; linotype operators, 9.6 per cent. 10 
It seems reasonable to assert that $800 is a 
minimum family expenditure upon anything 



THE NATURE OF POVERTY n 

less than which "the task of making both ends 
meet is too severe to be successfully accom- 
plished in ordinary circumstances, without a 
lowering of the standard of living below the nor- 
mal demands of health, working efficiency, and 
social decency." n 

In actual experience the wide gap between 
adult male earnings and necessary family ex- 
penditure drives a large part of such families 
to eke out the earnings of the father by sending 
the mother and children out to work. Of the 
group of families in New York City that spend 
from $800 to $1100, studied by Professor Chapin, 
three fifths were dependent in some degree upon 
the earnings of wife and children and upon in- 
come from lodgers. 12 Not only is such supple- 
mentary income transient and insecure, but it 
is obtained at a social cost not less heavy than 
that which underfeeding, underclothing, and 
overcrowding involve. In seeking to make eco- 
nomically possible a normal family life, it destroys 
the very possibility thereof. 

The social implications of such conditions are 
unmistakable. They mean that a great mass 
of those whom we are accustomed to regard as 
the earth's most highly civilized people are 
habitually under-supplied with the things, physi- 
cal and spiritual, which the human structure 
requires, and that this inadequate provision 



12 THE ABOLITION OF POVERTY 

involves not only bitter struggle but imperfect 
existence, destined if unchecked to result in 
under-vitalized and degenerate stock, like the 
dwarfed growths of bare mountain-sides or the 
stunted animal life of arid plains. This lends 
tremendous interest to the question, Is such 
poverty necessary and inevitable? 

Deliberate expressions emanating from vari- 
ous quarters have maintained the necessity of 
poverty. Of these, the exploitation of Biblical 
texts, "the poor shall never cease out of the 
land," and "ye have the poor always with you," 
is the most familiar and the least creditable. 
Historically this argument is to be associated 
with the early phase of emotional faith and 
material relief in which almsgiving, having de- 
tached itself from philanthropy on the one side 
and from social good on the other, degenerated 
into a mode of expiatory penance. 13 Mr. Lecky 
reminds us how this form of "selfish charity/' 
w r herein "men gave money to the poor simply 
and exclusively for their own spiritual benefit, 
and the welfare of the sufferer was altogether 
foreign to their thoughts/' acquired at last 
gigantic proportions, and exercised a most per- 
nicious influence upon Christianity. If "alms 
are paid to the credit of the giver, and are real- 
ized as such by him in the after-world/' the 
persistence of poverty serves some end. Want 



THE NATURE OF POVERTY 13 

is at least not purposeless if salvation may be 
acquired in relieving it. 14 

In our own day an appeal to Biblical authority 
as warrant for the continued existence of economic \ 
want represents a vicious exegesis whereby 
humanitarian appeal is perverted into quietist } 
assent. That the interval between wealth and 
want is great, that standards of existence are 
progressive, that material well-being is social 
justice — this is the real meaning of the mes- 
sage. Any other interpretation implies a the- 
ology which would predestine masses of men to 
physical suffering and mental degradation in 
order that the well-endowed may attain mental 
calm and spiritual grace. 

Economic radicalism is noisily intolerant as 
to the passing of poverty. Socialism, land na- 
tionalization, administrative inaction, each rests 
its case for social reconstruction less upon evi- 
dence of economic want or upon vistas of social 
betterment than upon ah assumed maleficence 
of the existing industrial order whereby the 
inevitable corollary of capitalistic wealth is 
exploited labor. The collectivist theory of the\ 
progressively increasing misery of the working- 
classes, as set forth in the Communist Mani- 
festo of 1847, maintained that: "The modern- 
laborer, . . . instead of rising with the prog-; 
ress of industry, sinks deeper and deeper below 



i 4 THE ABOLITION OF POVERTY 

the conditions of existence of his own class. 
He becomes a pauper, and pauperism develops 
more rapidly than population and wealth." 15 
Henry George based his brilliant polemic upon 
the assumption that "poverty and all its con- 
comitants show themselves in communities just 
as they develop into the conditions toward which 
material progress tends"; and again that "mate- 
rial progress does not merely fail to relieve pov- 
erty — it actually produces it." 16 Mr. Herbert 
Spencer has asserted that poverty is an inevi- 
table incident of the working-out of natural 
selection in social evolution; 17 and the laissez- 
faire creed of extreme individualism is para- 
phrased in the contention that "all the poverty 
and misery permeating the civilized states, 
except such as is deliberately self-inflicted or 
the result of ill-health, are due to temporary 
and local mistakes in legislation." 18 

This association of material progress and 
economic misery is not only a presupposition of 
any social panacea, but the assumption upon 
which its urgency rests. Emphasizing the fu- 
tility of any other method of relief than the 
particular one proposed, such assertion of the 
present inevitableness of misery resolves itself 
into propagandist advocacy of an economic 
specific. It may be too much to claim that Karl 
Marx himself, frankly acknowledging the bene- 



THE NATURE OF POVERTY 15 

ficial effects of factory legislation, "threw over- 
board his theory of increasing misery"; 19 but 
certainly scientific socialism has relegated the 
doctrine to minor and immaterial rank. Appro- 
priation of " unearned increments" in land value, 
whether in part, or up to complete nationaliza- 
tion, figures in present-day debate as a fiscal 
device and not as a mode of social reconstruc- 
tion. As to political inaction, the same inexorable 
pressure of social expediency which for a cen- 
tury and a half has amended successive ideals 
of "natural liberty" and "natural right," finds 
small use for a revamped doctrine of human 
perfectibility through non-intervention. Public 
sentiment and expert opinion are agreed that 
"government may attain its end — the good of 
the people — by some more effectual process 
than the very simple and easy one of putting 
its hands in its pockets, and letting them 
alone." 20 

There is finally a complacent belief in the 
necessity of poverty, born of class privilege and 
material interest. In least objectionable phase, 
it is a prepossession rather than a deliberately 
reasoned judgment. The logic employed is 
hardly more than that the immemorial exist- 
ence of poverty is presumptive evidence of its 
place in the general scheme of things. Yet even 
in this form it is the mental attitude — as often 



16 THE ABOLITION OF POVERTY 

inarticulate as avowed — of great numbers of 
intelligent, well-endowed men. The mischief it 
begets is inertia rather than resistance; but the 
net evil is considerable. Closely related is the 
smug conviction that all poverty is sin — the 
consequence of thriftlessness, prodigality, in- 
temperance, unchastity, even irreligion. Eco- 
nomic want thus becomes the penalty of moral 
or spiritual lapse, destined to endure because 
men falter in conduct or in faith. Specific cases 
of poverty are undoubtedly traceable to indi- 
vidual misconduct. So, too, Professor Huxley 
reminds us that if all men spontaneously did 
justice and loved mercy, swords might be ad- 
vantageously turned into ploughshares, and the 
occupation of the judges and police would be 
gone. 21 But to utilize these considerations in 
justification of social inaction is economic 
pharisaism, neglecting the most obvious facts 
of modern industrialism — the undeserved pov- 
erty that comes from involuntary idleness, from 
industrial accident, from parasitic occupation. 
It is the holier-than-thou doctrine diverted to 
economic use. 

v- Against such postulates of theological con- 
I venience, industrial fatalism, and class quietism, 
I the general body of economic students assert 
I that poverty, understood as economic insuffi- 
ciency, is an incident of industrial evolution, 



THE NATURE OF POVERTY 17 

not an essential of economic structure ; that its 
presence implies maladjustment, not normal I 
working; that its control may be effected byj 
wise social policy, and that its ultimate dis- 
appearance is a fair inference from the facts of J 
economic experience. Professor Alfred Marshall 
voices this doctrine of social hopefulness in 
declaring that just as we have outgrown the 
conviction that slavery, which the classical world 
regarded as an ordinance of nature, is neces- 
sary, so we are abandoning the belief that pov- 
erty must exist, or that there need be great 
numbers of people foredoomed from their birth 
to grinding toil, unrewarded by even the bare 
necessities of decent existence. 22 To point out 
the theoretical warrant for such conclusions 
and to outline the practical measures whereby 
they may be realized will be the purpose of the 
following pages. 



CHAPTER II 

THE SOCIAL SURPLUS 

The basis of social well-being is an adequate 
supply of economic goods and services. Society 
can only enjoy a decent, wholesome life if human 
effort as applied to natural elements produces 
at least as much as must be consumed in the 
course of such production. Every assertion of 
the needlessness of poverty in the modern state 
is therefore conditioned upon the assumption 
that national production equals a reasonable 
subsistence requirement. It is because the whole 
loaf is large enough to satisfy the hunger of all 
who must be fed that individual want is intol- 
erable. 

The history of economic growth has here been 
significant. Starting from a rude social order 
wherein bare and uncertain existence was the 
most that man could wrest from nature, society 
has attained an incredible economic produc- 
tivity by the development of intellectual force 
and manual dexterity, by the more efficient 
arrangement of its own powers, and most of all 
by the discovery and utilization of natural 
energies. The diffusion of comforts, the possi' 



THE SOCIAL SURPLUS 19 

bility of luxuries, the rise of arts and letters, 
the spread of culture — in a word, the develop- 
ment of civilization is the consequence of in- 
creased economic production. 

There is no assignable limit to the increase 
of the economic product. The reasons for this 
are clear. The goods and services which satisfy 
economic wants and so make up the category 
of wealth are the results of definite factors — 
labor, capital, natural agents, and directive 
intelligence — working in joint association. As 
each constituent element increases, whether in 
amount or in specific efficiency, the resultant 
product increases. The degree of increase of a 
given factor need not necessarily correspond 
to that of the product. Indeed, other things being 
equal, an increase in the productive factor which 
has been present in industrial enterprise in 
normally efficient ratio — as labor in a well- 
populated country or capital in a creditor state 
— will be attended by a less than corresponding 
increase in total product. But the assumption 
of other things in the world of economic produc- 
tion being equal is rarely warranted. The les- 
son of modern industrial history has been that 
an increase of one factor ordinarily compels a 
more efficient rearrangement of existing forces, 
and thus secures a larger product. As long as 
the supply of laborers augment in number and 



20 THE ABOLITION OF POVERTY 

in skill, as long as the motives operate that lead 
to capital accumulation by the foregoing of 
present for future satisfaction, as long as the 
secret energies of nature continue to be unearthed 
and utilized, as long as captains of industry are 
evolved with gifted faculties of leadership — so 
long may the total product of industry be ex- 
pected to increase in greater proportion than 
those whose necessary wants it must supply. 

The economic pessimism of a century ago fore- 
cast a cyclical arrest of economic production 
with the increase of mankind, and this threat 
of overpopulated retrogression is still occasion- 
ally revived. Foreshadowed in economic litera- 
ture of the eighteenth century, the doctrine 
figures in the history of social philosophy as 
"the principle of population' ' of Thomas Robert 
Malthus. It has been said that Malthus wrote 
a book which nobody reads and everybody 
abuses. 23 Certainly the actual content of the 
1 'Essay," in light of the circumstances under 
which it was originally composed and of the 
notable changes which successive editions under- 
went, is very different from prevailing mis- 
conceptions as to its meaning and purpose. 

Malthus wrote in 1798, in denial of the con- 
tention of William Godwin that the repeal 
of government and law would make possible 
the existence and permanence of a society "all 



THE SOCIAL SURPLUS 21 

the members of which should live in ease, hap- 
piness, and comparative leisure.' ' Waiving any 
question as to the temporary effectiveness of 
the particular device proposed, Malthus rested 
his case against such perfectibility exclusively 
upon the consideration — in comparison with 
which all other arguments seemed of "slight 
and subordinate" import — that population 
tended to increase in a geometrical ratio and 
food in an arithmetical ratio, with the result 
that population is perpetually reduced in num- 
bers and in condition to the subsistence level, 
with concomitant vice and misery. 24 

In his own lifetime Malthus amended the two 
fundamental assumptions upon which his doc- 
trine was based. The geometrical ratio was 
qualified by recognition of the principal of moral 
restraint, and the arithmetical ratio was made 
contingent upon a law of diminishing returns in 
agriculture. The subsequent history of the doc- 
trine has involved further modification of these 
two essentials. As to "the passion between the 
sexes' ' which Malthus believed would always 
remain "nearly in its present state," regard has 
been had, on the one hand, to the claim of the 
biologists that "the progress of civilization must 
inevitably diminish fertility, and at last destroy 
its excess,* 25 and, on the other hand, to the 
contention of social philosophers that democ- 



22 THE ABOLITION OF POVERTY 

racy strives for a higher standard of comfort 
by delayed marriage and diminished birth-rate. 
Similarly, the tendency of the soil to yield dimin- 
ishing product with successive application of 
labor and capital has been restated in the light 
of the progressive improvement in agricultural 
arts and the recurring exploitation of uncul- 
tivated areas. 26 

The present import of the Malthusian doc- 
trine in relation to economic progress might 
accordingly be defined briefly as a series of 
unfavorable tendencies as to birth-rate and 
food-supply counteracted in net practical effect 
by a group of opposing favorable tendencies. 
This is true even as to primary food. In the last 
fifteen years the population of the civilized 
world, excluding China, has been increasing at 
the rate of about I per cent a year, whereas the 
average annual increase in the five great cereals 
— wheat, corn, oats, rye, and barley — has been 
about 2.5 per cent. In other words, production 
has increased two and a half times as much as 
was necessary to keep per-capita consumption 
constant. 27 Social experience and industrial 
outlook suggest that as the population of the 
civilized world grows larger there is likely to be 
a yet greater supply of economic goods and 
services, with the resultant possibility of ampler 
provision for each individual member of society. 



THE SOCIAL SURPLUS 23 

This conclusion has been set forth with even 
greater definiteness by Mr. Rowntree in the 
final sentence of his notable study of modern 
poverty: "The dark shadow of the Malthusian 
philosophy has passed away, and no view of the 
ultimate scheme of things would now be accepted 
under which multitudes of men and women are 
doomed by inevitable law to a struggle for exist- 
ence so severe as necessarily to cripple or destroy 
the higher parts of their nature/ ' 28 

A familiar corollary of the Malthusian doc- 
trine has to do with the increased cost of raw 
materials, growing out of the assumedly greater 
difficulty attending their production. The clas- 
sical political economy — given characteristic 
form in the decades following the Napoleonic 
contest and influenced largely by the contrast- 
ing agricultural depression and the industrial 
prosperity of early nineteenth-century England 
— drew sharp distinction between the produc- 
tion of raw materials and the working-up of 
such materials into finished products. The one 
category was subject to a law of diminishing 
returns, the other to a law of increasing returns, 
and the preponderance of one or the other ele- 
ment in the composition of economic goods 
determined whether a larger population could 
be better or worse sustained. Thus Senior fore- 
cast, not without a certain uneasiness, . that 



24 THE ABOLITION OF POVERTY 

there would be no limit to the increase of wealth 
and population in Great Britain if the supply 
of raw produce could but keep pace with the 
power of working it up. 29 And Mill, although 
holding to the law of increasing returns with 
more reserve, still maintained that as popula- 
tion and industry advanced, the exchange values 
of manufactured articles relative to agricultural 
products showed a certain and decided tendency 
to fall. 30 

Later analysis has divested the classical for- 
mula of misleading simplicity by giving its terms 
at once a wider and a more guarded applica- 
tion. It is possible to point to certain areas of 
the populated globe or to certain periods in the 
world's history in which population has literally 
caught up with and gone beyond the volume of 
wealth production. Adam Smith characterized 
the condition of such a society as declining, in 
contrast to advancing or stationary, and be- 
lieved that the cause of retrogression was that 
"the funds destined for the maintenance of 
labor were sensibly decaying/ ' with a conse- 
quent reduction of the wages of labor to "the 
most miserable and scant subsistence. " 31 A 
broader survey of social progress has enlarged 
the element of truth in Adam Smith's analysis. 
A society wherein population is increasing with- 
out restraint and wherein the inventive arts have 



THE SOCIAL SURPLUS 25 

become stagnant will inevitably press upon the 
bare limits of physical subsistence. But this law 
of social stagnation, like the possible advent 
of an era of diminishing returns, is no explana- 
tion of the poverty which looms up so forbidding 
in the modern industrial state. Far from being 
in declining or even in stationary condition, the 
civilized world of to-day is, and, barring brief in- 
tervals and small areas, has for a long time been, 
advancing in all elements that affect the rela- 
tive supply of economic goods. 

A generation ago Sir Robert Giffin called 
attention to the fact that those countries of 
Europe — England, Russia, Germany, France, 
Austria, and Italy — which had for a century 
been increasing enormously in population, had 
been increasing even more remarkably in 
wealth. 32 This tendency has since continued. 
In Great Britain, for example, the national in- 
come increased from £27 per head in 1867 to 
£40 per head in 1901, or a gain of nearly fifty 
per cent. As compared with the increase in 
population the principal industries in the United 
Kingdom have similarly outstripped the in- 
crease in numbers in the past fifty years. The 
production of coal, relative to population, has 
increased from 2.62 tons to 6.07 tons; of pig 
iron, from 13.5 tons to 22.9 tons; of shipbuilding, 
from 9.72 tons to 23.52 tons; the consumption 



26 THE ABOLITION OF POVERTY 

of raw cotton has increased from 28.1 pounds to 
44.7 pounds, and of raw wool, from 10.40 pounds 
to 13.46 pounds. 33 

Even more notable development might be 
anticipated in a new country such as the United 
States, blessed with a vast area of virgin soil, 
endowed with marvelous natural resources, and 
inhabited by a sturdy and ingenious popula- 
tion. As a matter of fact American economic 
opinion early dissented from the gloomy views 
of the English classical group. In 1820 Daniel 
Raymond admitted that although it was im- 
possible to discover any flaw in Malthus's rea- 
soning, "yet the mind instinctively revolts at 
the conclusions to which he conducts it, and we 
are disposed to reject the theory, even though 
we could give no reason for rejecting it." 34 Go- 
ing further, Henry C. Carey in 1835 asserted, 
" I am not aware of a fact in his [Malthus] book 
in regard to man in a state of civilization, that 
goes to support his theory," and added, "If not 
disturbed in its growth, capital will increase 
more rapidly than population, and with its in- 
crease will be increase of education, and of all 
comforts, moral and physical. " 35 Subsequent 
opinion may have receded somewhat from the 
high mark of Carey's optimism, but it still leaves 
incredible the opinion that existing poverty 
in the United States is the consequence of abso- 



THE SOCIAL SURPLUS 27 

lute dearth. If elements of the population have 
for any considerable time received incomes less 
than sufficient to maintain decent and wholesome 
existence, the explanation is something other 
than that the total product was not sufficient 
to supply them. 

This conclusion is confirmed by the actual 
course of economic production in the United 
States. It will scarcely be maintained that in 
1800,— to take a safe starting-point, — when 
the population of the United States was some 
five millions and fertile land was to be had vir- 
tually for the asking, any poverty which may 
have existed therein was a necessary result of 
insufficient wealth production. Yet only a few 
years thereafter Daniel Raymond declared, 
"In the United States also we find that pau- 
perism prevails in different parts in proportion 
to the unequal division of property. There are 
more paupers in the cities than in the country, 
and fewer in New England than in any other 
part of the country; because property is more 
unequally divided in the cities than in the 
country, and less unequally divided in New Eng- 
land than in any other part of the country.' ' 36 

During the first fifty years of the century, 
from 1800 to 1850, population increased from 
5,308,483 to 23,191,876, or four-fold. For this 
period no serviceable figures of national pro- 



28 THE ABOLITION OF POVERTY 

duction are available. But bearing in mind that 
it was the half-century of internal improvement 
and railroad construction, of frontier extension 
and of industrial awakening, a conservative 
estimate might certainly assume that the in- 
crease of wealth at least kept pace with the 
growth in population, and that in 1850, just 
as in 1800, any poverty which may have existed 
in the United States is not to be explained by 
national dearth. From 1850 on, statistics of 
wealth production are obtainable, and rough 
comparison of the relative growth of popula- 
tion and income is possible. From 1850 to 1900 
the population of the United States increased 
from 23,191,876 to 75,994,575, or 226 per cent. 
But in this same period the production of the 
eight great cereals increased from 871,000,000 
to 4,434,000,000 bushels, or 409 per cent. 37 What 
was true of increase in agricultural production 
obtained to an even greater extent with respect 
to economic goods in general — iron and steel, 
textiles and general manufactures. The pro- 
duction of wool, relative to population, increased 
from 2.26 pounds in 1850 to 3.79 pounds in 1900; 
of cotton, from .09 bales to .13 bales; of coal, 
from .27 tons to 3.16 tons; of pig iron, from .02 
tons to .18 tons; of steel, from .0005 tons (in 
1867) to .13 tons; of petroleum, from .66 gallons 
(in i860) to 35.16 gallons; of manufactured 



THE SOCIAL SURPLUS 29 

products, from $43.94 to $150.10; of total exports 
and imports, from $13.70 to $29. 53. 38 

In recent years, material progress has been 
as remarkable. Between 1900 and 1910, the 
production of coal, relative to population, in- 
creased from 3.16 tons to 4.86 tons; of pig iron, 
from .18 tons to .29 tons; of crude steel, from 
.13 tons to .28 tons; of crude petroleum, from 
35.16 gallons to 95.69 gallons; of manufactured 
products, approximately, from $150.10 to $224.- 
76; of total exports and imports, from $29.53 
to $35-90. 39 The per-capita production of the 
principal crops underwent, it is true, decline, 
being in 1909 a little more than nine tenths of 
that in 1899. Some part of this was due to the 
extraordinary circumstance of deficient crops 
in the census year; 40 but the essential explana- 
tion is that this decade saw foreshadowed the 
inevitable transition of the United States from 
an agricultural to a manufacturing society. Like 
England at the beginning of the nineteenth 
century and Germany in our own generation, 
the United States has found it relatively more 
profitable to apply labor and capital to manu- 
facture than to agriculture, and to discharge 
some part of its foreign debits by exports of manu- 
factured goods rather than agricultural products. 

Monetary estimates of national wealth are 
notoriously defective and misleading; but con- 



30 THE ABOLITION OF POVERTY 

fined to a single country and computed for a 
term of years, they are serviceable for general 
economic comparison. The true value of all 
property in the United States — an aggre- 
gate materially less than that of " national 
wealth' ' — is estimated to have increased from 
$7,135*780,000 in 1850 to $107,104,212,000 in 
1904, and to probably not less than $150,000,- 
000,000 in 1913. In the same period, popula- 
tion increased from 23,191,876 in 1850 to 82,- 
466,551 in 1904, and to probably not less than 
97,163,330 in 1913. The per-capita estimate 
would thus show an increase from $307 in 1850 
to $1318 in 1904 and to approximately $1543 in 
191 3. In short, since 1850 the increase in prop- 
erty, so measured, has exceeded the growth of 
population as five to one. 41 

An increase in national surplus, both abso- 
lute and relative to population, is conceivably 
not incompatible with the continued necessity 
of poverty. Such excess may be absorbed in 
raising the standard of existence and yet be 
insufficient to eliminate want. It has long 
been the favorite contention of economic con- 
servatives that poverty as insufficiency represents 
the rapidly closing gap between national pro- 
duction and necessary consumption, and that 
the improvement in the condition of working- 
classes attests the certainty with which the 



THE SOCIAL SURPLUS 31 

tendency is proceeding. We are reminded that 
in the last quarter of a century — to go back 
no farther — wages have risen more rapidly than 
retail prices; that " non-physical" expenditures 
have increased; that deposits in savings banks 
have augmented; that per-capita consumption 
of wheat, sugar, and meat have grown; that 
the death-rate has declined; and that, in short, 
"the experience of all industrial countries with- 
out exception shows a steady and unprecedented 
improvement in the conditions of the working- 
class." 42 

The improving status of the working-classes 
is, however, no answer to the challenge of want. 
As a matter of fact, imperfect as is our knowl- 
edge of the amount of poverty existing at the 
present time, very much less comparative in- 
formation is obtainable for earlier periods. The A \ 
most that can be hazarded is that there is no; 
reason to conclude, from the statistical andi 
historical evidence available, that the amount and \ 
intensity of poverty, relative to population and 1 
prevailing standards of life, is markedly less/ 
to-day than at any period in the past century 
similarly placed in the economic cycle. 

Even were it true, however, that social prog- 
ress is moving surely, though slowly, toward 
the elimination of want, there is every reason 
why the speed should be accelerated by cautious 



32 THE ABOLITION OF POVERTY 

and tested social intervention. It is preemi- 
nently here that the wasteful ruthless course 
of natural selection may be aided by deliberate 
selection. For the social surplus to be applied 
to improving the condition of working-classes 
with minor regard to the outright elimination 
of poverty is a misuse of increasing national 
wealth. If any such alternative be necessary, 
it is far better that want should cease to be the 
lot of some than that greater comfort should 
come to others. 

But the root of the problem lies deeper. Pov- 
erty, like certain of its primary causes, is a phase 
of modern industry. The very forces which 
increase the national product and enlarge the 
social surplus, if left to themselves, breed con- 
ditions of want. As machine production becomes 
more intricate and operating speed more in- 
tense, the number of unavoidable accidents is 
likely to increase. As the subdivision of indus- 
trial processes grows more minute and the use 
of unskilled labor more practicable, the under- 
payment of unorganized or unorganizable work- 
ers becomes more common. As business com- 
petition waxes more acute and reserve funds 
of labor are found more economical, unemploy- 
ment and under-employment become chronic. 
Industrial accident, parasitic employment, in- 
voluntary idleness are thus incidents of capi- 



THE SOCIAL SURPLUS 33 

talism. Far from diminishing with increased 
wealth production, the misery resulting from 
such causes is, in face of social inaction, likely to 
augment and intensify. Society may grow richer, 
civilization may advance, and yet poverty con- 
tinue to gnaw, cancer-like, at its vitals. 



/ 



CHAPTER III 

THE DISTRIBUTION OF INCOME 

The existence of poverty thus passes from a 
problem of economic production into a prob- 
lem of economic distribution. There is appar- 
ently enough to suffice. The national dividend 
is abundant and to spare. But the process of 
allotment seems to give not enough to many, 
and by inference too much to some. 

The question immediately presents itself as 
to whether this chronic under-apportioning is 
a necessary consequence or an avoidable inci- 
dent of the competitive system, understanding 
by that term the procedure whereby modern 
societies distribute the national dividend among 
their constituent members. In economic dis- 
cussion this alternative is the issue between 
collectivism and social regulation. Collectivism 
asserts that poverty is an inevitable result of 
capitalistic industry, and insists that anything 
short of socialized production and distribution 
is an ineffective palliative. Social regulation, 
on the other hand, assumes that poverty is the 
transient friction which attends industrial as well 
as physical progress, and maintains that economic 



THE DISTRIBUTION OF INCOME 35 

want can be checked and eliminated by appro- 
priate social treatment. 

It cannot be too strongly emphasized that 
neither course countenances laissez-faire. What- 
ever welcome may have been accorded the policy 
of non-intervention, in times more congenial 
to the acceptance of abstract philosophical doc- 
trines as rules of economic conduct, there is 
supreme impatience in our own day at any sug- 
gestion of " administrative nihilism" as a re- 
sponse to the challenge of poverty. Such dicta 
as "the great universal progress toward indi- 
vidual liberty, which, as far as can be known 
by mortals, is the first and immediate object 
of the scheme of humanity," 43 sound as archaic 
as eighteenth-century watchwords. Even though 
masked in the more respectable phrases of bio- 
logical analogy, laissez-faire has been repudiated 
alike by public sentiment and by expert opin- 
ion as the efficient corrective of social ills. Were 
it true that natural selection, working raw and 
unaided in social evolution, would eventually 
extinguish the evil of poverty, the process of 
elimination would yet be so wasteful, so brutal- 
izing, as to insure its rejection as a social policy. 
But as a matter of fact it is not clear that the 
survival of even the socially fittest, through the 
operation of selection, would be unattended by 
poverty. Indeed, the very assumption of such 



36 THE ABOLITION OF POVERTY 

a process is a struggling mass, crowded down 
to bare subsistence, from which survivorship 
is possible only at the expense of continuing 
misery and want on the part of the undertrod- 
den. It is a lethargic optimism rather than any 
scientific warrant which forecasts the elimina- 
tion of poverty through social inaction. 

This is the lesson of all labor legislation. Un- 
restricted competition tends to preserve rather 
than reduce the socially less favorable elements 
in modern business. Left to itself capitalistic 
industrialism would have made slow progress 
in the improvement of working conditions. We 
seem to have passed far beyond the represen- 
tation of the textile industry before the Lords' 
Committee on Child Labor, in 1818, that a 
fourteen-hour working day — from six in the 
morning until eight at night — for children, 
even as young as nine years, was attended with 
no physical disadvantage and, indeed, tended to 
improve the mental and moral state of the chil- 
dren; 44 or from Senior's contention in 1837 that 
the exceeding easiness of cotton-factory labor 
rendered long hours practicable; that the whole 
net profit of the manufacturers was derived 
from the last hour of the working day, and that 
a reduction of the number of hours which young 
persons could work, from twelve to ten hours, 
would be utterly ruinous to the industry. 45 But, 



THE DISTRIBUTION OF INCOME 37 

in fact, such expressions find counterpart in the 
present-day experience of every industrial state. 
They, and the support accorded them, can best 
be understood as the desperate efforts of mar- 
ginal enterprisers rather than as the brutal greed 
of average employers. 

Modern industrial products are composite 
with respect to the conditions of their produc- 
tion. The principles of differential cost and 
marginal determination, which the classical 
economists conceived as peculiar to agriculture, 
prevail over the whole field of industry. Just 
as there are in every branch of business "cap- 
tains of industry, " who, by reason of unusual 
ability, favorable location, and abundant credit, 
are able to reap large gains, so quite at the other 
extreme there are insecure enterprises limited 
in opportunity, handicapped in resources, strug- 
gling on from month to month to maintain busi- 
ness existence. It is this marginal group, driven 
to all conceivable devices to effect economies, 
who define the competitive base-line from which 
society must protect itself. 

Diametrically opposed to laissez-faire in con- 
tent, but related thereto in panacea-like quality, 
is the proposal of collectivism as a corrective of 
poverty. From the days of Owen and Saint- 
Simon, socialistic opinion has maintained that, 
with common ownership and operation of all 



38 THE ABOLITION OF POVERTY 

instruments of production, and with common 
apportionment of product according to some 
predetermined standard, there would be an end 
of economic want. Universal conscription in an 
industrial army, elimination of competitive 
wastes, systematization of productive energies 
are to provide the socialistic state with a tre- 
mendously enhanced national income, sufficient 
to raise the standard of living materially above 
the necessary minimum. Just as collective 
operation will furnish a larger product, by cor- 
recting the planlessness and waste of competing 
production, so socialized distribution, by pre- 
venting capitalistic exploitation and by replac- 
ing competitive struggle with definite allotment, 
will insure sufficient individual income. There 
will be more to go around, and social justice will 
make certain that it does actually so go. 

Socialism is not to be brushed aside, any more 
than laissez-faire is to be established, by an 
appeal to political creed or economic dogma. 
Competitive industry, like private property 
itself, possesses no inherent warrant or sanc- 
tity. It is an economic convention utilized by 
industrial societies on sheer ground of expedi- 
ency. The product of industrial evolution, it 
retains place by the assumption that a greater 
degree of human welfare can be attained by 
this device than by any other arrangement. 



THE DISTRIBUTION OF INCOME 39 

Once, however, apparent that, by virtue of 
changed conditions or new social standards, 
competitive industry no longer secures maxi- 
mum well-being and is even productive of grave 
social hurt, its right to be terminates. 

This was maintained even before the acute 
problems of modern industrialism had arisen. 
"For though I don't think a State of Nature to 
compare with the State of Civil Government," 
wrote Jacob Vanderlint, a long-forgotten eco- 
nomic writer of the eighteenth century, "if the 
Plenty be made great enough to support the 
People comfortably, yet if the Bulk of Mankind 
be made miserable by the Oppression of the 
rest; as they undoubtedly are, when the Wages 
of the Labourer, and Price of necessaries for 
such a Family as he must often sustain, and which 
indeed he was chiefly sent into this World to 
raise, are not very near equal: I say, such an 
unhappy State of Mankind is, in my Opinion, 
worse than a State of Nature itself." 46 A cen- 
tury later, economic utilitarianism definitely 
incorporated into its creed the doctrine that the 
distribution of wealth is a matter of human 
institution, solely. "The things once there," 
John Stuart Mill declared, "mankind, indi- 
vidually or collectively, can do with them as 
they like. They can place them at the disposal 
of whomsoever they please, and on whatever 



40 THE ABOLITION OF POVERTY 

terms. . . . Even what a person has produced 
by his individual toil, unaided by any one, he 
cannot keep unless it is the will of society that 
he should." 47 

But however free to do so, society is not likely 
to enter lightly upon a radical economic recon- 
struction. There must be undoubted evidence 
that the new arrangement will be productive 
of the ends contemplated both in immediate 
and in net result. Socialism has hitherto failed 
to give this assurance. It has not even made 
clear that collectivism would mean a larger or 
even as large a national dividend — the funda- 
mental condition of any real social betterment. 
As against the economies of systematized and 
non-competing production, the socialistic state 
would suffer the losses of repressed initiative 
and standardized service. What the actual out- 
come would be is conjectural. A plausible brief 
can be drawn for either side, and in the absence 
of confirmatory evidence and with the impos- 
sibility of experimental verification, the case 
rests simply as unproved. 

No one has stated this issue with greater clear- 
ness and fairness than August Schaflde: " So- 
cialism would have to give the individual at 
least as strong an interest in the collective work 
as he has under the liberal system of produc- 
tion — it would have to secure to every sub- 



THE DISTRIBUTION OF INCOME 41 

group a premium on extraordinary amounts of 
collective production, and a loss through col- 
lective slackness; it is as much and still more 
bound to bestow effective distinction on all 
special success in technical development, and 
duly to reward great individual merit; and, 
finally, would have to provide that all the in- 
numerable labor forces should be directed into 
the channel of their most profitable use, not by 
the orders of an authority, but by the force of 
individual interest. Otherwise, it will scarcely 
secure a fairer distribution of the national prod- 
uce, and certainly not greater economy in social 
production, than is on an average secured by 
the liberal industrial system, acting through the 
most acute stimulus to private interest, and 
by proportioning price not only to the cost of 
production, but also, and mainly, to the value 
in use of separate services and commodities at 
a given time and place, and in a given trade or 
industry." 48 

This uncertainty as to the outcome of collec- 
tivism as a system of production has received 
far less examination than it merits. Attention 
has rested too exclusively upon the obvious 
wastes of competitive industry, in contrast to 
the conceivable economies of socialized produc- 
tion. Such comparison of the seen with the un- 
seen serves useful purpose in remedial criticism; 



42 THE ABOLITION OF POVERTY 

it affords no sufficient ground for attempted 
reconstruction. 

There remains the possibility that collec- 
tivism, though resulting in no increased national 
product nor even in one as large, might never- 
theless reduce or eliminate existing want through 
the socialized distribution of what is actually 
so produced. An increased product would be 
desirable; but an equivalent or even a reduced 
product, if it be more reasonably distributed, 
might solve the problem. Just as there is un- 
certainty as to whether socialized production 
would result in increased yield, so there is doubt 
as to the wider consequence and ultimate effect 
of socialized distribution upon individual well- 
being. The mental progress, the moral charac- 
ter, the numerical increase of the race, are all 
obviously involved, but with what result no 
man has yet been able to make convincingly 
clear. 

It is this perilous uncertainty that has led 
the hard sanity of the thinking elements of the 
community to refuse a leap in the dark, and at 
the same time, profoundly moved by the com- 
pelling evidence of social dislocation, to accept 
as its inarticulate creed the noble declaration 
of John Stuart Mill, voiced two generations 
ago: "If, therefore, the choice were to be made 
between Communism with all its chances, and 



THE DISTRIBUTION OF INCOME 43 

the present state of society with all its suffering 
and injustices, ... all the difficulties, great or 
small, of Communism would be but as dust in 
the balance." 49 

Repudiating laissez-faire, but unwilling save 
as a final resort to venture upon the uncharted 
sea of socialism, the economist searches for some 
less drastic method by which the desired end 
can be attained more certainly, and without at- 
tendant evils of greater magnitude. This has been 
carefully phrased by a recent thoughtful writer: 
1 'The problem of the future is to devise a gradual 
modification of the system [of property] by which 
its advantages — the encouraging of industry, 
originality, energy, enterprise, individuality which 
it affords, the measure of liberty for all and the 
greater liberty which it secures for a few, the 
training in character and the development of 
individuality, the sense of responsibility and of 
family solidarity which it encourages — shall 
be secured without the outrageous inequalities, 
the material hardships and uncertainties, and 
the injury to character which are produced alike 
by excessive wealth and excessive poverty.' ' 50 

Constructive social regulation offers this pos- 
sibility. It recognizes the intolerable evils of 
poverty, but insists that preventive measures 
are possible, quite as effective and far less peril- 
ous than those which involve radical change 



44 THE ABOLITION OF POVERTY 

in the existing industrial order. It proposes to 
retain the competitive system of industry, both 
as to production and distribution, but to impose 
thereon, by restraint of law and by pressure 
of public opinion, such limitation and control 
as experience demonstrates to be necessary for 
the largest social interest. This means a sys- 
tematic attack upon the primary causes of pov- 
erty, in lieu of the symptomatic, detailed treat- 
ment of the old poor-relief. 

It has not been easy for society to realize that 
poverty is not of necessity the result of the 
mental weakness or moral lapse of the individ- 
ual; that thrift, chastity, and even religious 
faith do not secure release from galling want; 
and that modern industrialism has intensified 
the liability of the wage-earner to sink into eco- 
nomic need through no fault of his own. Thanks 
to the profound influence of biological science 
upon common thought, some appreciation of 
these principles has entered the public mind. 
With it has come the new realization that just 
as the causes of poverty are deep-seated and 
remote, so the treatment must be fundamental 
and definitive. Similarly, public effort for the 
elimination of want has been, up to the present 
day, opportunist and unrelated. Evoked ordi- 
narily by glaring disclosure of the tragedy of 
want or by specific exhibits of social wreckage, 



THE DISTRIBUTION OF INCOME 45 

such effort has commonly taken the form of posi- 
tive treatment of local disturbance rather than 
preventive correction of deep-seated disorder. 
There has never been a well-considered, delib- 
erately planned campaign against the causes of 
poverty, looking forward to its definite elimi- 
nation as a form of social disease. Until such 
effort has been made — and failed — it is neither 
scientifically sound nor tactically wise to aban- 
don an existing industrial order for a new and 
untried one. 

More than three hundred years ago, an earnest 
economic writer made inquiry into "the canker 
of the common wealth.' ' The title-page of the 
tract set forth that "the Author imitating the 
rule of good Phisitions, First, declareth the dis- 
ease. Secondarily, sheweth the efficient cause 
thereof. Lastly, a remedy for the same." Ma- 
lynes's problem was local and his answer tran- 
sient. But in declared plan his long-forgotten 
treatise anticipated the best type of modern 
social endeavor. 51 



CHAPTER IV 

THE RATE OF WAGES 

Poverty, in its practical aspect, is a phase of 
the wage question. Large bodies of toilers are 
in receipt of incomes less than enough to main- 
tain wholesome existence, and it is from this 
class that the mass of poor are mainly recruited. 

This conclusion does not overlook the misery- 
breeding effect of an unfavorable social environ- 
ment and an inadequate public service. One of 
the most competent students of modern social 
conditions finds a cause of dependence greater 
than any other, except that of defective educa- 
tion, in the fact that society surrounds the in- 
dividual with many pitfalls that are not easily 
discerned and from which the average man 
cannot keep free: " infection from contagious 
diseases, congestion making disease easy, unsani- 
tary and unlighted and unventilated dwellings 
from among which the individual tenant must 
choose his home, impure milk the chief cause 
of infant mortality, and impure water from which 
the individual has no sufficient defense, dirty 
streets, contaminated air, adulterated food." 62 



THE RATE OF WAGES 47 

In much the same way, the failures of society 
to afford efficient governmental service and to 
provide adequate police regulation are to be 
accounted causes of individual need. Economical 
administration, prompt legal redress, equitable 
taxation, on the one hand, and labor legislation 
as to the employment of women and children, 
the use of safety appliances, and the provision 
of sanitary working environment, on the other 
hand, mean greater well-being. 

Yet in the largest sense, it remains true that 
the most effective aid for those below the pov- 
erty line lies in the increase of income. Apart 
from its efficacy, it is the procedure most con- 
sistent with personal independence and indi- 
vidual self-respect. Social workers have often 
noted the languid interest, sometimes the vague 
resentment, entertained by wage-earners against 
projects of patronal aid and welfare work — even 
extending to an attitude of relative indifference 
to the enactment of favorable labor legislation. 
The explanation lies in the workingman's deep- 
rooted conviction — the product of long and 
bitter industrial experience — that the well- 
being which comes to him in the form of increased 
earnings is more substantial for the present and 
more promising for the future than either the 
philanthropically inspired benevolence of his 
employer with its restraints and involvements, 



48 THE ABOLITION OF POVERTY 

or the final resort of legal enactment with its 
delays and uncertainties. 

The insufficient income of normally compe- 
tent workmen means either that the mechanism 
of wage determination is socially unsound, or 
that the mode, while sound in itself, is perverted 
by impeding forces. Modern economic philo- 
sophy maintains the latter view, and denies that 
an insufficient wage is a necessary consequence 
of free industrial contract. This may, indeed, 
be fairly described as the trend of authoritative 
economic opinion from the days of Adam Smith. 

The "iron law" of wages was read into the 
classical political economy by reactionary exag- 
geration, and thereafter crudely identified with 
its tenets by those well-meaning reformers whose 
economic equipment is traceable to Cobbett 
and Carlyle. As a matter of fact, Adam Smith, 
Mai thus, and Ricardo were of one mind in main- 
taining the possibility of economic betterment. 
Not a bare level of subsistence but a progres- 
sive standard of comfort determined wages, and 
as to this: "The friends of humanity cannot but 
wish that in all countries the labouring classes 
should have a taste for comforts and enjoy- 
ments, and that they should be stimulated by 
all legal means in their exertions to procure 
them." 53 In much the same way, the formalism 
of the wage-fund doctrine was distorted, by 



THE RATE OF WAGES 49 

minor text-writers in the early nineteenth cen- 
tury, into a depressing cycle of increasing labor- 
supply and minimum remuneration. But more 
rational views prevailed, and a succession of 
economists, from Richard Jones and Montifort 
Longfield, through John Stuart Mill, to Longe, 
Thornton, Cliffe Leslie, Jevens, and Walker, 
insisted that the laborer's destinies lay abso- 
lutely in his own hands. 

The consensus of present-day opinion among 
political economists that poverty is not a neces- 
sary consequence of the wage system is unaf- 
fected by the striking lack of agreement as to 
the principle determining the rate of industrial 
remuneration. Whether wages are governed 
by the cost of " producing the laborer," or by 
the laborer's standard of life, or by the ratio of 
the labor-supply to the amount of available 
capital, or by the residual left from other dis- 
tributive shares, or by the specific productivity 
imputable to marginal labor, is far from deter- 
mined. Recent semi- judicial inquiries as to the 
normal rate of wages in given industries have 
referred to the disappointing failure of economic 
science to provide practicable standards of 
reference. The Board of Arbitration, in the 
1 9 12 controversy between the Eastern Railroads 
and the Brotherhood of Locomotive Engineers, 
sought vainly for "some theoretical relation, 



50 THE ABOLITION OF POVERTY 

for a given branch of industry, between the 
amount of the income that should go to labor 
and the amount that should go to capital." 
After asserting that "political economy is unable 
to furnish such a principle as that suggested," 
the arbitral award took refuge in standardiza- 
tion between different areas as "the basis upon 
which a judgment may be passed as to whether 
the existing wage scale of the engineers in the 
Eastern District is fair and reasonable." 54 So, 
too, the Massachusetts Commission on Mini- 
mum Wage Boards (1912) not only flatly denied 
the existence of "an economic law w r hich, by 
some mysterious but certain process, correlates 
earnings and wages," but asserted that "wages 
among the unorganized and lower grades of 
labor are mainly the result of tradition and of 
slight competition." 55 

It is probable that the rival wage doctrines 
of modern political economy represent related 
facets of a general truth, and that opposed 
theories of distribution emphasize but successive 
aspects of a common uniformity. Certainly such 
doctrines, however different in other respects, 
are identical in what is in this connection the 
essential particular, — agreement that there is 
nothing inherent in or disclosed by any accredited 
wage theory necessarily to preclude the toiler 
from securing an economically sufficient wage. 



THE RATE OF WAGES 51 

Thus the cost-of-production theory insists that 
wages must be at least high enough to enable 
the laborer to rear a family in unimpaired vigor. 
If depressed below this minimum, increased 
mortality will so reduce the supply of laborers 
as to insure return to the higher level through 
the competitive bids of the employers. Stated 
in modified form, this doctrine becomes the 
standard-of-life theory, wherein the welfare of 
the wage-earner is regarded as resting in his 
own hands, being much or little above the level 
of bare subsistence, according to the degree of 
his insistence, in wage bargaining, upon a remu- 
neration sufficient to maintain or even improve 
habits of comfort. The explanation of wages 
as a phase of the demand-and-supply formula 
has discarded the hidebound rigidity of the old 
wage-fund doctrine, and simply sets forth that 
the conditions of employment at any given time 
and place are affected by the ratio of available 
capital to the supply of localized labor, but that 
wages cannot for any considerable time remain 
below the level of an existence minimum. Going 
beyond this, the residual-claimant theory em- 
phasizes the possibility of the wage-earner 
securing, in supplement of a necessary minimum, 
not only the benefit of his own greater efficiency, 
but even a major part of the general gains of 
social progress. Finally, the productivity theory 



52 THE ABOLITION OF POVERTY 

assigns to the wage-earner, by the working of 
free competition, that part of the product which 
he has assisted in creating imputable to his 
specific services, and necessarily large enough to 
insure his continued efficiency. 

Since there is nothing inherent in modern 
wage determination to prevent the normal toiler 
from securing under favorable conditions an 
economically sufficient wage, his inability at 
times to do so must be in consequence of rela- 
tively weaker position in industrial bargaining 
as compared with the capitalist employer. This 
inferiority ordinarily results from the mono- 
polistic control of the labor demand by indus- 
trial combination, or from the incomplete 
substitution of collective for individual wage ad- 
justment by the laborers. To the degree that 
rival employers are brought into combination, 
the level of free competition in wage bargain- 
ing is obviously tilted to the disadvantage 
of the laborer, even though such capital cen- 
tralization may make its management more 
sensitive to the pressure of public opinion. 
One of the purposes, entertained rather than 
avowed, of governmental check upon indus- 
trial consolidation has been to restore a more 
active competition for labor force on the part 
of employers. A more practicable method 
of restoring equilibrium is the organization 



THE RATE OF WAGES 53 

of the labor-supply into a competitively equal 
unit. 
y, The replacement of individual by collective 
bargaining in wage adjustment is the prime 
purpose of contemporary trade-unionism. Such 
was not always the original design, and to it 
have certainly been added other significant 
activities. But collective bargaining is after all 
the dominant concern; whatever else a labor 
organization attempts is in reinforcement of this 
device. 

The necessity for concerted action on the part 
of the laborer has been recognized almost from 
the beginning of sound thinking in the field of 
economic distribution. Even before the advent 
of capitalism and the factory system, Adam 
Smith noted that " tacit, but constant and uni- 
form combination' ' of employers, and the con- 
sequent disadvantage of unorganized workmen 
in wage disputes. 56 With the repeal of combi- 
nation laws a generation later, a narrow economic 
philosophy sought to justify the contemporary 
disadvantage of wage-earners in industrial bar- 
gaining by the concept of a wage fund, with its 
implication of a rigid predetermined rate of 
wages that neither trade-unions nor collective 
action could affect. The reaction came, first, 
in admission of the actual achievement of trade- 
unionism, then in recognition of its tactical 



54 THE ABOLITION OF POVERTY 

necessity in wage bargaining, culminating in 
radical reconstruction of the theory of wages. 
From the time of Longe and Thornton, "the 
verdict of the economists" has been virtually 
unanimous in insisting that a necessary assump- 
tion of free competition in wage contracting is 
the organization of labor for purposes of col- 
lective bargaining. 57 This has not involved 
approval of all the policies nor indorsement of 
many of the devices of modern trade-unionism. 
But there is essential agreement as to the primary 
contention, that collective bargaining is neces- 
sary for the workman to secure as wages at least 
that part of the product of industry which free 
competition tends to award him. 

This conclusion is in general confirmed by 
existing wage standards. It is not meant that 
wages are invariably high in organized, and 
invariably low in unorganized, trades. As a 
matter of fact, the base-line needed for such 
comparison is in itself highly irregulan/Xmong 
the most puzzling facts in industrial relations 
are the differences in earnings from labor. There 
is not enough in the traditional explanation of 
the causes of wage variations — abundance or 
scarcity of supply relative to demand, ease or 
hardship of the occupation, cheapness or ex- 
pense of learning the business, constancy or 
inconstancy of employment, smallness or great- 



THE RATE OF WAGES 55 

ness of trust reposed in the workmen, proba- 
bility or improbability of success in the trade — ■ 
to account for the fact that locomotive engineers 
earn twice as much as painters, with an appre- 
ciably shorter working day, or that hod-carriers 
receive practically the same wages as retail 
clerks. It would be extravagant, of course, 
to explain the relatively high wages received 
by locomotive engineers among skilled, and by 
hod-carriers among unskilled, workmen, solely 
by the effective trade-unionism that obtains 
in these crafts. A more complex relation of cause 
and effect is probably responsible — higher 
remuneration originally growing out of peculiar 
circumstances has made possible organization, 
and organization has in turn extracted higher 
remuneration. This much can, however, safely 
be set forth : in those trades where an efficiently 
organized, intelligently directed trade-unionism 
prevails, wages have either risen higher than 
they otherwise would have or have suffered less 
reduction than would otherwise have occurred. 
f It is not only as to rate of wages that trade- 
unionism can serve as the defense of the toiler. 
The several elements which make up the con- 
ditions of employment, and which affect the 
toiler for good or ill in hardly less degree than 
the rate of wages, — working hours, shop rules, 
apprentice regulations, — can be made more 



56 THE ABOLITION OF POVERTY 

favorable by reason of labor organization. A 
striking example of this is the service of trade- 
unionism in reducing the suffering which from 
the time of the industrial revolution has attended 
the introduction of labor-displacing machinery 
in particular crafts. This is apparent if we com- 
pare the acute distress which the introduction 
of the power loom brought to the old hand- 
weaving industry, an unorganized craft, with 
the easy readjustment which marked the intro- 
duction of the linotype in the printing trade, 
a highly organized craft. 58 It is true that con- 
ditions were unusually favorable to the work- 
men in the case of the linotype, and the recent 
history of the glass-blowing and stone-cutting 
industries indicate that trade-unionism cannot 
entirely avert the suffering incident to abrupt 
change in industrial processes, even though 
guided by more intelligent policies than actually 
prevailed. Yet even here and in other industries 
in which labor-displacing machinery has been 
introduced, the effect of trade-unionism has been 
at least to prevent demoralization and disaster. 
Trade-unionism extends over but a fractional 
part of the industrial field, and even over much 
of the area nominally included, its sway is loose 
and ineffective. Recent competent studies show 
that the membership of national unions affiliated 
with the American Federation of Labor in 191 1 



THE RATE OF WAGES 57 

was approximately 1,800,000, and that the total 
membership of the non-affiliated national unions 
in 191 1 did not exceed 600,000, or 2,400,000 in 
all. 59 If to this be added 100,000 to allow for 
the membership of non-affiliated local unions and 
of other national federations, — such, for ex- 
ample, as the 10,000 membership of the Indus- 
trial Workers of the World, — it would appear 
that the organized labor force of the United 
States does not exceed 2,500,000. There are, 
however, a considerable body of laborers who 
have at one time or another been connected with 
such organizations and who may be regarded as 
still affected by the spirit and sentiment of trade- 
unionism. Assuming, by a very liberal estimate, 
that this latter class aggregates 1,000,000 per- 
sons, it would appear that the total number of 
wage-earners in the United States, organized 
to some extent for purposes of collective bar- 
gaining, or affected in some degree by the spirit 
of unionism, is less than 3,500,000. 

The census of 1900 returned the number of 
persons in the United States, of ten years of age 
and upward, engaged in gainful occupations as 
somewhat more than 29,000,000. Of these ap- 
proximately 10,000,000 were industrial wage- 
earners, while more than 5,000,000 additional 
(farm laborers, salaried employees, selling force, 
and domestic servants) were maintained by 



58 THE ABOLITION OF POVERTY 

some manner of contractual wages. 60 If we con- 
fine our attention, however, to the 10,000,000 
industrial wage-earners, and assume — the actual 
enumeration for 19 10 not yet having been 
made available — that the number of persons 
so engaged increased between 1900 and 19 10 in 
the same proportion as the total population of 
the United States, the corresponding aggre- 
gate for 1 9 10 would probably be more than 
12,000,000. It thus appears that probably less 
than one third of the industrial wage-earners 
of the United States are organized in form or 
in spirit for purposes of collective bargaining. 
The remaining two thirds receive compensa- 
tion for their services upon the basis of indi- 
vidual bargaining, ordinarily under terms of 
disadvantageous inequality on the part of the 
employee. If regard be had to the entire body 
in receipt of wages, the percentage of organi- 
zation is probably not greater than one fifth. 

Under such conditions the wages of most 
workers are maintained above, or even at the 
level of, economic sufficiency only by the com- 
petition of employers and the relative scarcity 
of labor. To the extent that employers act in 
concert, tacit or avowed, or that the labor-supply 
is congested locally or industrially, or that an 
industrial class have degenerated into parasitic 
dependence, the share of the wage-earner sinks 



THE RATE OF WAGES 59 

to the poverty line. For the great body of those 
in receipt of wages, an effectively organized, 
intelligently administered trade-unionism offers 
the surest remedy against capitalistic exploi- 
tation and social parasitism. In so far as this 
protection does not exist, the toiler is exposed 
to oppression by the enterpriser, on the one hand, 
and to spoliation by society, on the other. 

It is sometimes asserted that the economic 
advantage of trade-unionism to the wage-earner 
is apparent rather than actual, and that his 
real, in contradistinction to his nominal, wages 
are reduced rather than augmented by collec- 
tive bargaining. This may happen, conceivably, 
in two ways. The total product of industry may 
be so reduced by the interference and restraint 
imposed upon capitalistic enterprise by labor 
organization that the wage-earner's quota, al- 
though the same or even larger relatively, will 
be less absolutely. Or the burden of such wage 
increases as trade-unions succeed in wresting 
from the employer may be ultimately shifted 
to the consumer — in consequence of higher 
prices — with the result that the laborer as a 
consumer loses all and more of the benefit that 
he has acquired as producer. Thus, it has been 
recently stated, "Probably, when the question 
is put, what is the cause of the recent high prices, 
no answer is so frequently in the mouth of the 



60 THE ABOLITION OF POVERTY 

non-scientific man as 'organized labor.'" 61 
Indeed, this contention is heard in higher places. 
One of the most eminent of American economists 
has within the year made the startling asser- 
tion: " There is no question whatever in my 
mind that the rise of prices of almost all articles 
of general consumption during the last decade 
or two has been due, as much as to any one thing 
else, to the rise in money wages paid for the 
same or, even less." 62 

As to restrictive effect upon production, it is 
certain that the policies of some unions and the 
practices of others — limitation of output, 
"making-of-work," regulation of apprentices — 
go beyond the limits of mere protection against 
exploitation and parasitism, and tend to reduce 
the national dividend without corresponding 
social advantage. It may be proper to restrict 
the speeding-up of industrial processes by regu- 
lating the use of exceptional workers as pace- 
setters, or to check the influx of boy-labor into 
1 ' blind-alley" occupations by apprentice regu- 
lations. But there is no such justification, for 
example, for the long-established practice of 
the printers that plate matter must be reset, 63 
or for the practice of strong local unions in cer- 
tain trades of monopolizing employment by im- 
posing a prohibitive initiation fee upon appli- 
cants for union membership. 64 As a matter of 



THE RATE OF WAGES 61 

fact, such procedure represents the excesses of 
trade-unionism, not its essence. Public senti- 
ment, expert opinion, even labor leadership are 
in opposition to short-sighted, economically 
fallacious deference to "the short run," and the 
drift of trade-unionism is away therefrom. If, 
however, going beyond this, trade-unionism is 
denounced because of its mere interference with 
individual enterprise and "freedom of contract/' 
we are brought face to face with the old confu- 
sion between the creation of weal and the pro- 
duction of wealth. It is more than likely that 
a complete status of individual bargaining, just 
as entire immunity from legal regulation as to 
working conditions, would result for the time 
being in physically larger product. But all in- 
dustrial experience suggests that with such in- 
crease would go reduced well-being now and 
grave social injury thereafter. 

As to the contention that trade-unionism 
augments prices by increasing the expenses of 
production, the argument is in the main hypo- 
thetical. No such result will certainly attend 
if profits in the industry affected have been 
relatively high, or if increased wages are fol- 
lowed by heightened efficiency. Only in the 
event of actually increased labor cost being 
shifted to the consumer, through the channels of 
sub-normal profits and curtailed production, 



62 THE ABOLITION OF POVERTY 

will the incidence of the increased wages be borne 
by the consumer. Even then it remains to be 
determined whether higher prices and partial 
dislocation counteract the advantage of higher 
remuneration. The one attempt at a statistical 
determination of this complex problem reaches 
the cautiously guarded conclusion that "There 
seems to have been no great difference in price 
movements as between weakly organized and 
relatively strongly organized industries, while 
the greatest advances have come in industries 
which are practically unorganized." 65 

The slow spread of trade-unionism is due in 
part to the inertia of workmen, in part to 
the resistance of employers, in part to the 
use of unsound policies by the unions them- 
selves. Effective organization calls for restraint, 
sacrifice, and leadership, and these are slowly 
acquired characteristics of the labor world. The 
most competent students of trade-unionism 
have likened it to " industrial democracy," and 
the simile is justified at least in the gradual 
evolution of structure and function. 

The organization of labor has been further 
impeded by the hostility of employers to col- 
lective action on the part of their work-people. 
It has been necessary to fight step by step for 
recognition, and even now the employers' assent 
is ordinarily enforced and grudging. Traceable 



THE RATE OF WAGES 63 

to the historical conditions under which indus- 
trial contract has developed, this deep-seated 
resentment long showed itself in hostile law and 
in unfriendly judicial interpretation no less than 
in outright resistance. More recently, in lieu 
of an unqualified hostility to collective bargain- 
ing as such, this resistance appears in bitter 
opposition to specific trade-union policies deemed 
indispensable to effective action by the unions 
themselves. 

But most of all, the extension of trade- 
unionism has been checked by its own mistaken 
practices and tactical blunders. Immaturity 
in development has permitted crude abuses, 
such as arrogant leadership and jurisdictional 
disputes. Over-emphasis upon immediate result 
has encouraged economically unsound policies, 
such as restriction of output, making of work, 
and limitation of apprentices. Neglect of larger 
consequences has countenanced anti-social modes 
of enforcement, such as sympathetic boycotts 
and physical violence. 

In all of these directions, however, the vista 
is encouraging. The labor world is awakening 
to wider and deeper consciousness that what- 
ever the future may offer through radical eco- 
nomic reconstruction, the immediate improve- 
ment is to be achieved by organization and col- 
lective action. The employing world and public 



64 THE ABOLITION OF POVERTY 

opinion in general have grown to realize that 
trade-unionism is not necessarily what trade- 
unionists sometimes do, and that the organiza- 
tion of labor is in essence only the attempt to 
place the two parties to industrial contract upon 
a plane of bargaining equality. Finally, out of 
repeated trial and hard experience has come 
greater wisdom to the unions. New types of 
labor leadership are being evolved, short-sighted 
policies are becoming discredited, and a sounder 
and wiser unionism is in sight. 



CHAPTER V 

THE UNDERPAID 

Trade-unionism, however widely extended 
and efficiently organized, cannot avert poverty 
from three classes of the community: (i) from 
those who by reason of certain distinctive con- 
ditions of work and workers tend to remain in- 
sufficiently paid ; (2) from those who are desirous 
of working but are periodically unable to obtain 
employment; and (3) from those who through 
physical infirmity or disability find it impossible 
to secure adequate employment at all. These 
categories may be distinguished as (a) the under- 
paid, (b) the unemployed, (c) the unemploy- 
able. The abolition of poverty involves the as- 
surance of economic sufficiency to the members 
of these several classes. 

The inability of trade-unionism to remedy 
the under-payment of specific groups of wage- 
earners results either from the unorganizability 
of such groups or from the social undervaluation 
of their industrial product. A body of laborers 
is unorganizable when the elements that com- 
pose it cannot, under existing conditions and 
for any considerable time, be assembled into a 



66 THE ABOLITION OF POVERTY 

dirigible force capable of determining or at least 
influencing the conditions of employment by 
the use of collective bargaining and its attend- 
ant devices. 66 This disability may be due to 
the low mentality or the volatile temperament 
of the laborers, as in the case of the longshore- 
men. It may result from the continuing influx 
of immigrant labor, as in the case of "extra 
gangs" of railroad track laborers. It may be in 
consequence of the " assisted" quality of the 
industry itself, as in the case of less skilled needle 
trades. In each such instance, the wage contract 
becomes the result of individual bargaining 
wherein weak and detached labor units are pitted 
against relatively strong and solidified employers. 
Nominally contracting under free competition, 
the one party enters the contest insuperably 
handicapped, so that only by industrial acci- 
dent — a local or temporary scarcity of work- 
men, an abrupt increase in employment demand 
— will the rate of wages actually paid corre- 
spond to a normal distributive share. There is 
no assignable lower limit to the level of wages 
under such conditions, other than the despera- 
tion of half-starved bodies. 

It does not follow that a class of workmen 
now unorganizable are bound to remain so. In- 
deed, quite apart from influences from without, 
one of the most notable results of that form of 



THE UNDERPAID 67 

intervention here proposed has been to ener- 
gize masses of sodden, passive workers into con- 
sciously self-helping groups. It is nevertheless 
true, however, that there exist great bodies of 
toilers who, at the particular time and place, 
are incapable of being organized for collective 
bargaining. 

It is possible, moreover, even when a parti- 
cular group of laborers are so well organized as 
to meet their employers upon a fair competitive 
level and thus prevent excessive profits, that the 
rate of wages which collective bargaining is able 
to secure for any considerable time is less than 
the amount sufficient to maintain a wholesome 
existence. This is because the valuation placed 
by society upon the marginal unit of product 
is less than enough to permit the payment of a 
sufficient wage after the deduction of the pre- 
vailing rate of industrial profits. Under such 
conditions of relatively excessive production, 
any attempt on the part of the particular work- 
men affected to raise their wages to the level 
of necessary income is attended with almost 
insuperable difficulty. 

There is no social justification for underpaying 
industries. The workers in such a trade are part- 
supported either by their families, and so indi- 
rectly by the better-paying industries, or by 
society as a whole in the form of community 



68 THE ABOLITION OF POVERTY 

charges entailed by the physical and moral de- 
terioration of the underpaid. These industries 
are properly described as parasitic. They afford 
a limited class of consumers an unfair advan- 
tage over the general community with attend- 
ant misery and wretchedness to the wage-earners 
involved. It is as economically unsound for a 
body of toilers to be exploited in behalf of a 
group of consumers as in the interest of a mono- 
poly-intrenched employer. 

In both circumstances, — that is, where col- 
lective bargaining cannot be utilized and where 
social revaluation of the particular product is 
needed — a sufficient wage can best be assured 
the laborer by state intervention defining mini- 
mum wage conditions. This is the assertion of no 
new principle. From the beginning of modern 
factory legislation, the state has time and again 
intervened to establish a competitive base-line 
in industrial enterprise whenever it has become 
clear that free contract fails to insure conditions 
of employment compatible with the social in- 
terest. In this manner, the length of the work- 
ing day, the employment of women and children, 
the safeguarding of dangerous processes, have 
heretofore been defined as to least favorable 
terms by legal enactment. The motive of such 
legislation has been to replace, by exercise of 
the state's police power, that minimum well- 



THE UNDERPAID 69 

being which the wage-earner cannot secure for 
himself and which it is essential for the safe- 
guarding of society, that he should enjoy. The 
same intervention is now invoked to establish 
as a minimum wage — for less than which it 
shall not be lawful for employers to contract or 
laborers to engage — an amount not less than 
the necessary cost of maintaining the worker's 
family in health and decency. 

The immediate effect of such a legally imposed 
minimum wage is the relief of a large class of 
underpaid wage-earners otherwise exposed to 
poverty. Nor are the collateral consequences 
alarming in so far as disclosed by positive evi- 
dence or determinable by theoretical analysis. 
The payment of a sufficient wage may lead to 
heightened efficiency on the part of the worker, 
or to more economical methods of production 
on the part of the enterpriser, in which event 
the gain has been effected without any loss 
whatever. If profits have been abnormally high 
in the industries or establishments affected, the 
burden of increased wage payment will rest upon 
the employer — a transfer highly desirable in 
itself. Finally, if the industry be parasitic, in 
the sense that a low price to the consumer is 
made possible by underpayment of labor, the 
proposed enactment will effect a social revalua- 
tion of the product through the successive stages 



7 o THE ABOLITION OF POVERTY 

of reduced profits, curtailed industry, and dimin- 
ished output. 

The menace of discharged labor is often referred 
to in minimum wage discussion. An economist 
of distinction has lately declared that such a 
policy "will merely render entirely idle, and 
throw entirely on the Poor Law or on friends and 
relations, a number of persons who formerly 
were — or at all events ought to have been — 
partially supported from those sources, while 
they at the same time did a certain amount of 
productive work." 67 Such argument, in so far 
as it implies anything more than the temporary 
dislocation due to industrial change, must as- 
sume the existence of a fund of unemployed from 
which the vacated places are to be filled, or 
the possible replacement of the displaced labor 
by the introduction of machinery or more eco- 
nomical methods of production, or the actual 
curtailment of production. Of these possibilities 
the third may be dismissed as conceivable only 
in the event of production having been exces- 
sive or parasitic — in either of which cases re- 
striction is desirable. As to the first two con- 
tingencies, — replacement of unemployed labor 
by machinery or by more efficient organization, 
— such changes are obviously in the interest 
of society in general as replacing less by more 
economical methods of production. It is de- 



THE UNDERPAID 71 

sirable that the distress of dislocation be mini- 
mized and that provision be made for those 
injuriously affected; but the cautious extension 
of minimum wage legislation, combined with 
intelligent appreciation of the complex elements 
involved, may reasonably be expected to attain 
such results. 

The worthy inefficient and the deserving in- 
competent, whose prominence in minimum wage 
discussion is comparable to the r61e of the widow 
and orphan in fiscal debate, will be cared for 
by exceptional provision. Just as those trade- 
unions which insist most strongly upon a stand- 
ard wage rate permit members who have be- 
come unable to command the minimum rate to 
work for what they can get, 68 so properly drafted 
minimum wage legislation authorizes licensed 
exemption. A typical provision is that of the 
bill submitted to, but unfortunately not enacted 
by, the General Assembly of the state of Mary- 
land in 1914: "The [Minimum Wage] Commis- 
sion shall make rules and regulations whereby 
any female or minor unable or unwilling to fairly 
earn the minimum wage determined on shall 
be granted a license to work for a wage which 
shall be commensurate with his or her ability 
or appropriate to his or her circumstances and 
surroundings. Each license so granted shall 
establish a wage for such licensee, and no licensee 



72 THE ABOLITION OF POVERTY 

shall be employed at a wage less than the rate 
so established." 69 

A statutory minimum wage notably higher 
than that justified by the productive power of 
the ordinary worker might — assuming no ex- 
ploitation on the part of employers — lead to 
a considerable discharge of labor. Professor 
John B. Clark has deemed this likelihood suffi- 
ciently great to make necessary the association 
with minimum wage legislation of some scheme 
of public emergency employment. 70 Such an 
undertaking presents grave additional problems 
hardly justified by the circumstance that "It 
could be made to afford a certain practical test 
of the capabilities of socialism, and would at 
least be a better object-lesson than is elsewhere 
afforded." As a matter of fact, this fear is based 
entirely upon a recklessly fixed statutory mini- 
mum. As Professor Clark himself admits, "If 
the law itself prescribes no minimum, but creates 
a commission with power to prescribe it for each 
particular occupation, there is ground for think- 
ing that this commission may proceed in such 
a conservative way that its action will displace 
relatively few persons." 

No less familiar, although far more superficial, 
is the opinion that the establishment of a mini- 
mum wage would operate to make in practice 
the minimum also the maximum. There is no 



THE UNDERPAID 73 

warrant for this fear either in fact or in theory. 
The experience of minimum wage legislation 
in Australia and in England shows conclusively 
that, in industry after industry where the mini- 
mum wage has been set by law, the wages actu- 
ally paid tend to exceed this least requirement. 
The obvious explanation consists in the fact 
that the remuneration for labor is composite, 
consisting in part of the minimum defined by 
competition or by law and of a differential excess 
added thereto, equivalent to the superior skill 
of the particular workmen. The effect of mini- 
mum wage legislation is to raise the first con- 
stituent without in any wise interfering with the 
second. Individual workmen will continue to 
receive wages higher than the least well-paid 
workmen to the amount of their superior effi- 
ciency. The essential change consists in the 
elevation of the wages of the least well paid. 

The use of a statutory minimum wage to pre- 
vent the social injury growing out of insufficient 
wage payment is being urged with increasing 
confidence by social reformers in the present 
decade. In Australia, New Zealand, Great Bri- 
tain, and in various Commonwealths of the 
United States practical test has been or is being 
made of the device in one form or another. The 
results are neither so extensive nor so prolonged 
as to be conclusive. But they are withal signi- 



74 THE ABOLITION OF POVERTY 

ficant both in dispelling reasonable doubts as 
to some particulars and in confirming antici- 
pated advantages as to others. 

The experiences of Australia and New Zea- 
land were deemed sufficiently encouraging, in 
the light of expert report and rigid analysis, to 
warrant the adoption of the principle in Eng- 
land, where the Trade Boards Act of 1909 pro- 
vided the machinery for establishing a mini- 
mum wage in four typical trades. The act came 
into operation on January 1, 1910, but more 
than a year elapsed before the first rate affecting 
a single trade was made obligatory and rates 
affecting the other trades became effective much 
later. The Board of Trade still deems it pre- 
mature (June, 19 1 3) to set forth the ultimate 
effects of the act on the trades to which it has 
been applied. 71 But the results have justified 
extending the application of the act to other 
trades by the Provisional Order Bill introduced 
on May 1, 1913, thereby bringing between 150,- 
000 and 200,000 additional persons under its 
provisions, and approximately doubling the num- 
ber of persons affected by the act. 72 Although 
official reserve may check a formal verdict, the 
opinion of expert observers is available. One 
of the most competent of these has summarized 
the effect of the act upon the first of the indus- 
tries affected, — chain-making at Cradley Heath, 



THE UNDERPAID 75 

— "the protagonist of half a dozen inquiries 
and where all the evils associated with the ab- 
sence of any standard wage, the beating down 
of rates by employers, unendurably long hours 
of labour, the constant indebtedness of the 
workers to the middlemen, have in the past been 
rampant/ ' Since February, 191 1, when the new 
rates were made obligatory by the Board of 
Trade, these things have happened: 73 "In the 
first place, the piece prices paid for the poorest 
qualities of chain were raised from 40 to 80 per 
cent, and the workers' hourly earnings were in- 
creased in proportion. In the second place, the 
hours worked are shorter, for it is no longer 
necessary to work 70-80 hours in order to make 
a living. In the third place, the quality of the 
chain made has improved, for the speed of work- 
ing, though extraordinary, need no longer be 
so frantic as it was. In the fourth place, the 
whole standard of life in the district has been 
raised. The workers are better nourished and 
better dressed ; shopkeepers state that their sale 
of provisions has increased ; employers that ' the 
workers take more pride in themselves and show 
more care in their work'; insurance agents that 
arrears are less; school teachers that the school 
children are * better fed, better clothed, and 
better shod.' Trade-unionism, once almost hope- 
less, has grown apace, and the workers' repre- 



76 THE ABOLITION OF POVERTY 

sentatives on the Board have now asked for, and 
are likely to obtain, another 10 per cent. And 
this has been accomplished without, as yet, 
creating unemployment, and at the cost of a 
rise in the price of chain which is far less than 
the rise in the price paid the worker, and is only 
in part due to the advance in the latter." 

In the United States the enactment of mini- 
mum wage legislation has been even more recent 
— so recent, indeed, as to preclude even a trial 
exhibit as to results. The earliest act (Massa- 
chusetts) became operative on July I, 191 3, and 
the first actual determination of a wage rate 
(Oregon) took effect in November, 191 3. Fol- 
lowing the example of Massachusetts, in 1912, 
eight additional States adopted the system in 
some form or other in 191 3 and two more made 
provision for commissions of inquiry. Intense 
interest in the device has manifested itself in 
other progressive Commonwealths, and it is 
more than likely that 1914-15 will witness other 
States enacting such legislation. 74 

Some part of this activity is traceable to the 
sensational advocacy of a statutory minimum 
as a corrective of sexual immorality. The con- 
sensus of qualified opinion is that there is no 
such direct and immediate relation between low 
wages and vice as to admit of this easy rule-of- 
thumb solution. The actual process is a long 



THE UNDERPAID 77 

descent, fairly summed up in the phrase, "When 
wages are too low to supply nourishment and 
other human needs, temptation is more readily 
yielded to." 75 Rid of the incubus of cheap sen- 
sationalism and flimsy logic, minimum wage 
legislation is again urged on its real ground of 
economic expediency. 

The usual form of such legislation has been, 
following the English Act, to authorize a com- 
mission vested with powers to investigate, deter- 
mine, and fix minimum wages for women and 
minors in all occupations and industries, either 
directly or upon the findings of a "wage board" 
constituted for each specific inquiry. In but 
one State [Utah] is a minimum prescribed by 
statute. Elsewhere it has been recognized that 
the intricacy of industrial processes and the 
variety of local conditions make administrative 
determination far preferable to legislative pre- 
scription. 

The gravest difficulty which minimum wage 
legislation faces in the United States is the atti- 
tude of the courts as to the constitutionality 
of legal regulation of wages of workers in pri- 
vate employment. The prevailing theory has 
been that women and minors are in greater dan- 
ger of industrial exploitation, and that the law 
may impose such restrictions upon the contracts 
into which they enter as are deemed necessary 



78 THE ABOLITION OF POVERTY 

or wholesome. In the case of men, however, 
there has been a singular perversion of the his- 
torical purpose and the essential meaning of 
the guaranty that no man shall be deprived of 
his life, liberty, or property without due process 
of law, — with the result that it has been neces- 
sary for a judge of the United States Supreme 
Court to insist that "The 14th Amendment does 
not enact Mr. Herbert Spencer's 'Social Stat- 
ics'." 76 

A more intelligent appreciation of the eco- 
nomic necessity for legal wage regulation of male 
workers under certain conditions is bound to 
result in a revision of this interpretation. Once 
clearly understood, — that the underpayment 
of particular classes is inevitable under competi- 
tive industry, and that this carries with it per- 
manent social injury, — authority will be found, 
in the ordinary police power of the State to 
incorporate wage legislation with the general 
body of enactments defining mimimum condi- 
tions of employment. In short, "the princi- 
ples of laissez-faire, having been read into the 
Constitution, can be read out again." 77 



CHAPTER VI 

THE UNEMPLOYED 

The recurring inability of competent work- 
men to find employment is a cruel incident of 
modern industrial life. To be able and eager to 
work, and to be unable to secure a job, to rear 
a family in respectability and to see comfort, 
self-support, even decency slip away through 
no assignable fault, has been denounced again 
and again as social injustice. 78 More, perhaps, 
than any other single cause, involuntary idleness 
is responsible for the economic injury and mental 
bitterness of self-respecting toilers. 

That there is in every modern industrial com- 
munity such an "army of the unemployed' ' is 
the familiar experience of all students of social 
conditions. But for no other vital phase of eco- 
nomic maladjustment is statistical information 
less adequate or trustworthy. Indeed, it has 
been acutely observed by a careful investigator 79 
that, although the first question asked with 
regard to the unemployed is generally as to 
their number, yet as a matter of fact this is about 
the last question to which any scientific answer 
can be given, and that so limited are the sources 



80 THE ABOLITION OF POVERTY 

of information that, even when supplemented 
by all available collateral material, the analysis 
must of necessity be not of the numbers unem- 
ployed, but of the causes of unemployment and 
of their essential or accidental quality. 

Census inquiries as to unemployment have 
been attempted in the United States, Germany, 
and France; but the results have been insuffi- 
cient and defective. For Great Britain we have 
been dependent up to 19 12 upon the returns 
made by certain trade-unions paying unemploy- 
ment benefits and upon the records of " distress 
committees' ' as to the number of applicants for 
relief. For the United States, only two Com- 
monwealths — Massachusetts and New York — 
have made any systematic attempt to supply 
information as to unemployment, and in each 
case the inquiry is fragmentary. In both States, 
the source of information is the return made to 
the Bureau of Labor by certain trade-unions 
within the State as to the number of their members 
out of work at the given date. In Massachusetts 
the membership from which such returns were 
received for the last quarter of 1912 formed 
73.6 per cent of the aggregate membership of 
all local labor organizations, but only 29.8 per 
cent of the number of wage-earners in manu- 
facturing industries in the State (1909). 80 In 
New York returns were received in 19 12 from 



THE UNEMPLOYED 81 

183 selected unions, comprising about 21 per 
cent of the total union membership, but prob- 
ably not more than 10 per cent of the number 
of industrial wage-earners in the State. 81 In 
Massachusetts the average percentages of un- 
employment owing to lack of work or material, 
for the five years 1908-12, were respectively, 
12. 1, 5.6, 5.5, 5.4, and 4.5, the average for 1912 
being the lowest recorded during the period. 
In New York the mean percentages of idleness 
for causes other than labor disputes and per- 
sonal disability, for the five years 1908-12, were 
respectively 22.9, 11.0, 13.0, 15. 1, 12.2. 

Confirmation of the inferences to be drawn 
from census enumerations and related inquiries 
as to the extent and nature of unemployment 
is found in the intensive study made by Rown- 
tree and Lasker of conditions in the city of York, 
England, on a given day (June 7, 19 10). Defin- 
ing as unemployed a person "who is seeking work 
for wages, but unable to find any suited to his 
capacities and under conditions which are rea- 
sonable, judged by local standards," it was found 
that in this town of 82,000 inhabitants there 
were on the day in question 1278 unemployed 
persons, of whom about one half were not in 
any way disqualified for work. 82 

Making reasonable use of all available mate- 
rials it appears that a definite quota, varying 



82 THE ABOLITION OF POVERTY 

from two to ten per cent of the working force of 
every industrial community, are doomed at any 
given time to involuntary idleness. A condi- 
tion such as this can be fairly described, in the 
terms of one of its most careful students, as "a 
social evil appalling in its magnitude* ' and "a 
terrible blot on the face of the richest countries 
in the world/ ' 83 

It is clear that unemployment as an industrial 
phenomenon does not result from an absolute 
surplus of labor, nor even from a surplus of labor 
relative to available supplies of capital, land, or 
directive intelligence. Increasing wealth and 
larger per-capita productivity are the charac- 
teristics of the very countries where the evils 
of unemployment are actually experienced. 
Moreover, labor, far from being a drug on the 
market, as relative excess would imply, has 
steadily gained in market price. In Great Brit- 
ain, for example, during the past thirty years 
(i 878-1907) money wages in the principal indus- 
tries have risen nearly sixteen per cent, whereas 
the prices of ordinary commodities have fallen 
nearly nineteen per cent. 84 

Socialist opinion from the time of Rodbertus 
has insisted that a periodic discharge of quali- 
fied labor is a phase of the "anarchical" pro- 
duction of competitive industry, and that chronic 
unemployment and recurring crises are inevitable 



THE UNEMPLOYED 83 

consequences of the capitalistic regime. In some- 
thing of the same strain a less radical group of 
writers have urged that unemployment is the 
normal result of the gross inequality of modern 
incomes, whereby a large part of the product of 
industry is of necessity " saved* ' instead of being 
11 consumed' ' and the productive energy of the 
nation is misdirected and ultimately congested. 

From such necessitarian doctrines, political 
economists, as far back as Jean Baptiste Say 
and James Mill, have emphatically dissented, 
maintaining, on the contrary, that an " uni- 
versal glut" is inconceivable; that apparent 
overproduction is in reality misdirected produc- 
tion or partial underconsumption; that inability 
of competent workmen to secure employment 
is the symptom of temporary industrial disloca- 
tion in which too many men have undertaken 
to do some things and too few others, and that 
the remedy is a gradual readjustment of demand 
and supply. 

Much of the best social thought and effort of 
our day is being expended in the search for less 
wasteful and less sluggish correctives of unem- 
ployment than are implied in the demand-and- 
supply formula. This has involved, first, an 
analytical determination of the several causes 
responsible for involuntary idleness, and there- 
after the suggestion of specific devices to meet 



84 THE ABOLITION OF POVERTY 

the case of each distinct category of the unem- 
ployed, yr* ~ 4**~«* *# £ 

The involuntary idlene^fc of the industrially 
qualified results fijm UWree general causes : sea.- 
sonal fluctuatio ns, c yclical dep ressions, and the 
+gnffep r y of m^d^rn enterprise t o accum ulate 
a reserve fund of exces sjabor. Individual cases 
of unemployment may arise and, indeed, mul- 
tiply by reason of the dissolution of particular 
business establishments or in consequence of 
the gradual decay of entire trades. But such 
instances are not considerable in number at any 
given time, nor do they call for general treatment. 

Seasonal fluctuations are a normal consequence 
of climatic conditions and social habits. Com- 
mon as is such regular alternation of activity 
and dullness, there is a remarkable smallness in 
range of the percentage of the unemployed even in 
the most sensitive trades. Moreover, such sea- 
sonal unemployment does not as a rule involve 
acute distress. The slackening of business is 
more likely to be taken up by a reduction in 
the number of working days rather than by an 
outright discharge of workmen, with a conse- 
quent distribution of the loss over the whole 
working force. In addition, the fact that the dull 
season in certain trades corresponds to an active 
season in another makes it possible for work- 
men who are discharged from their usual em- 



THE UNEMPLOYED 85 

ployment in dull season to find some subsidiary 
occupation in another industry not so affected. 
Finally, seasonal fluctuations, in so far as regu- 
lar and calculable, are, or should be, allowed for 
in the determination of wages, the rate thereof 
being correspondingly higher than in the case t>f 
unaffected trades. In this sense any industry 
whose regularly recurring dull seasons bring 
distress to the working force must be deemed 
parasitic in the failure of average earnings to 
provide a sufficient wage. 

The cyclical recurrence of industrial depres- 
sions has been generally accepted by economic 
students as a feature of modern industrial life. 
Whether imputable to physical or to psycho- 
logical causes, we are likely to continue wit- 
nessing a more or less regular succession of flush 
times, culminating in feverish speculation and 
of acute depression, the aftermath of sharp 
crisis. The interval between crest and hollow 
may be lengthened, the degree of variation may 
be reduced, but some measure of periodic fluc- 
tuation, entailing a brisk labor market at one 
time and a degree of unemployment or under- 
employment at another, is likely to remain. This 
is the phase of unemployment which calls most 
imperatively for remedial action. As compared 
with seasonal unemployment, it is more pro- 
longed in duration, it involves a larger propor- 



86 THE ABOLITION OF POVERTY 

tion of the labor force in many trades, and the 
date of reemployment is less fixed or calculable. 

Allowance made for seasonal variation and 
cyclical depression, there still remains an ap- 
parently irreducible minimum of unemploy- 
ment which is not temporary but chronic, which 
obtains in skilled and organized as in unskilled 
and unorganized trades, and which results from 
the tendency of modern industry to provide itself 
with a reserve fund of casually and irregularly 
employed workmen available to meet excep- 
tional stress. Examination of the British trade- 
union returns of unemployment, extending back 
over a term of years, discloses the striking fact 
that the unemployed percentage, however much 
it may fluctuate, never sinks in the best years 
much below two per cent. 85 

This tendency to accumulate and maintain 
reserves of labor grows out of the existence of 
separate employers carrying on the trade in dif- 
ferent localities, each subject to irregularity and 
fluctuation. Instead of the definite requirement 
of a unified labor market, separate requisitions 
are made by many independent employers in 
removed localities. The result of this disorgan- 
ization is clearly indicated by Mr. Beveridge: 
"Because of this separation the actual aggre- 
gate force of these demands is normally in excess 
of the arithmetical aggregate; opposite varia- 



THE UNEMPLOYED 87 

tions are not set off against one another in prac- 
tice as they are in the statistics. The actual 
supply tends, of course, to conform to the actual 
demand; that is to say, it tends normally to be 
in excess of the arithmetical aggregate of the 
separate demands. In other words, the normal 
state of every industry is to be overcrowded with 
labour, in the sense of having drawn into it more 
men than can ever find employment in it at any 
one time." 86 

Distinct progress has been made in recent 
years in the solution of the problem of unem- 
ployment. Such a solution makes no endeavor 
to attain the ideal of continuous work, but aims 
at the practical result of preventing any man 
who is able and willing to work from sinking 
to destitution through lack of employment. 
The programme of relief consists of (a) public 
employment exchanges, (b) other measures of 
decasualization, and (c) unemployment insur- 
ance. 

It has been acutely remarked that, whereas 
in regard to all ordinary commodities there are 
markets or exchanges to which purchasers come 
and sellers resort, in regard to labor the prevail- 
ing method of seeking employment, that is, of 
selling labor, is to hawk it from door to door. 87 
The first and probably the most important step 
in the campaign against unemployment is to 



88 THE ABOLITION OF POVERTY 

do away with this practice by the deliberate 
organization of the labor market through the 
establishment of public employment bureaus 
or labor exchanges. Conducted by public au- 
thority and administered by expert superin- 
tendents, such agencies are designed to serve 
as places of registry to which unemployed work- 
men may come and to which, in turn, employers 
in search of additional men may turn. There 
is no interference with the wage bargain, the 
bureau confining its efforts to bringing the two 
parties to the contract into direct contact. The 
service rendered, while free of any charge, is 
devoid of either patronal or charitable element. 
The obvious service of a labor bureau, like 
any commodity market, is to save the waste of 
time and energy involved in the planless search 
of a buyer who wishes a commodity for the par- 
ticular seller who has it to offer. Not only is 
labor a commodity in this sense, but one pecu- 
liarly liable to deterioration and injury from 
indiscriminate hawking. An efficient labor ex- 
change can attack the very root of chronic unem- 
ployment by consolidating the aggregate labor 
demand of separate competing employers other- 
wise certain to supply themselves with surplus 
reserves of casual laborers, some part of whom 
are thus subject to under-employment. Instead 
of five employers, each seeking to attract one 



THE UNEMPLOYED 89 

hundred men although eighty meet normal re- 
quirements and the larger number represent an 
infrequently attained maximum need, a labor 
exchange, acting upon the principle akin to that 
of a consolidated banking reserve that all maxi- 
mum demands are not presented simultaneously, 
can encourage four hundred and fifty men to 
look forward to such employment and divert 
the remaining fifty into normally remunerative 
channels. Finally, a labor exchange, once se- 
curely established in the estimation of employers 
and employed, can perform important though 
informal service in giving advisory suggestion, 
sympathetic aid, and even educational guidance. 
It thus passes from a remedial device to a posi- 
tive influence in social progress. 

The organization of the labor market may be 
supplemented by various measures designed to 
aid decasualization and deconcentration. Of 
this character are the systematic provision of 
public work, greater elasticity in the working 
hours and wage rates of those actually employed 
in lieu of additions to or reductions from the 
ranks of employed, and the decentralization of 
town population by the provision of cheap and 
rapid transit between town and country, making 
it possible for urban workmen to live in the 
country and to tide over periods of unemploy- 
ment by the cultivation of small plots of ground. 



9 o THE ABOLITION OF POVERTY 

With this may go compulsory industrial train- 
ing and continuation schools for all youths, de- 
signed to avoid the recruiting of "blind-alley" 
occupations, as well as to reduce the supply of 
juvenile labor and to hasten the absorption of 
unemployed adult labor. 88 

For the completely efficient organization of 
the labor market, provision must be made for 
tiding over the unemployment due to seasonal 
fluctuation, to cyclical variation, to trade decay 
or individual misfortune, by measures more 
immediate than are offered by labor exchanges 
and supplementary measures of decasualiza- 
tion. This prompt relief can best be afforded by 
some system of insurance against unemployment. 
The device itself is familiar. Overlooking minor 
and somewhat unconvincing experiments ,by 
local bodies, the unemployment benefits main- 
tained by representative trade-unions give the 
best evidence of the practicability of such 
aid. Unfortunately only the stronger and more 
stable unions have been able to evolve and 
maintain unemployment benefits. In Great 
Britain it has been estimated that not more than 
one third of the trade-unionists have this pro- 
tection; in the United States the proportion is 
notably less, probably not more than one twen- 
tieth. For the great body of unorganized workers 
there is nothing of the kind whatever. - 



THE UNEMPLOYED 91 

Great Britain is the first country to meet 
squarely the issue thus presented by supple- 
menting a comprehensive system of labor ex- 
changes with a scheme of unemployment in- 
surance. The National Insurance Act of 191 1 
provides for the formation of an Unemployment 
Fund by definite contributions from employers 
and workmen, supplemented by a substantial 
state grant, to be used in payment of specified 
benefits to such workmen when unemployed. In 
addition, voluntary insurance against unemploy- 
ment is encouraged by the grant of state sub- 
ventions to trade-unions and other associations 
providing such relief. The first operation of 
the measure is limited to certain building and 
engineering trades embracing some 2,400,000 
workmen out of a total laboring population of 16,- 
000,000. But the scope of the system may be 
extended by administrative authority, and this will 
undoubtedly be done as rapidly as circumstances 
warrant. The measure became operative in July, 
1 91 2, and it is too early to speak of results. The 
consensus of opinion is, however, clearly that the 
principle of the scheme is sound, that its provi- 
sions are conservative, and that such defects as 
are likely to develop are remediable faults inevi- 
tably incident to pioneer social legislation. 

There remains to be briefly noted the condi- 
tion of deliberate unemployment or voluntary 



92 THE ABOLITION OF POVERTY 

idleness, presented by the shiftlessness, the malin- 
gering, and the vagrancy of the work-shy. It 
is from the chronically under-employed that 
these groups are largely recruited, and to the 
extent that unemployment is eliminated the 
supply source of this sorry company will be re- 
duced. For the remnant not so accounted for — ■ 
the body lightly described as "the unworthy 
poor/' but in reality social parasites, "as defi- 
nitely diseased as the inmates of hospitals, asy- 
lums, and infirmaries ,, — medical and correc- 
tional devices in the nature of labor colonies 
and reformatory schools can properly replace 
the existing ill-considered provision of food and 
shelter. 90 



CHAPTER VII 

THE UNEMPLOYABLE 

The adequate payment of the employed, the 
industrial absorption of the unemployed, will 
still leave uncorrected one cause of poverty — ■ 
the dependence of those, neither defectives 
nor delinquents, who, by reason of physical 
infirmity or disability, are unemployable at any 
economically sufficient wage. 

Some part of this incompetence is the direct 
sequel of underpayment and of unemployment. 
Men whose physical vigor is sapped by the under- 
vitalization which results from an insufficient 
wage, or whose moral independence is weakened 
by the bitter distress which follows in the train 
of involuntary idleness tend by sheer law of 
disuse to become economically unserviceable. 
The payment of a sufficient wage and the pro- 
vision of regular employment may therefore be 
expected, over and above their direct gain to the 
workmen, to avert the more insidious impair- 
ment of earning capacity growing out of physi- 
cal and mental deterioration. 

By far the larger proportion of the unem- 
ployable class owe their condition to a very dif- 



94 THE ABOLITION OF POVERTY 

ferent cause — the blight of sickness, industrial 
accident, or old age. For the consequent dis- 
ability, the ordinary workman has no margin 
of safety. Whether the omission be due to lack 
of foresight, to lack of resources, or to lack of 
insuring devices, the end is the same. There 
comes, without compensating provision, a loss 
of economic efficiency entailing inability to se- 
cure employment at the prevailing rate of 
wages. 

The old laissez-faire philosophy had a charac- 
teristic remedy for this tendency. Self-in- 
terest and free competition must, in the long 
run, it contended, give the laborer a wage at 
least sufficient not only to afford subsistence for 
himself and his family, but also to put aside 
enough to provide for the average disability 
incident to accident, invalidity, or old age. 
If the wages actually paid fell below this stand- 
ard for any considerable time, the supply of 
labor must be less than the normal requirement 
and the competition of rival employers must 
soon restore wages to the true level. It was ad- 
mitted, however, that such disturbances were 
undesirable, even though eventually resulting 
in a restored equilibrium. Accordingly all edu- 
cational devices — savings banks, friendly so- 
cieties, cooperative purchasing, patronal aid, 
and the beneficiary activities of trade-unions — 



THE UNEMPLOYABLE 95 

likely to develop habits of thrift and frugality 
in the working-classes were to be encouraged, 
as making provision for fortuitous or calculable 
disability. In all this, however, care must be 
taken to avoid anything likely to sap the wage- 
earner's self-reliance or to weaken the force of 
his self-interest. 

The cruel exhibit of modern industrial expe- 
rience has taught the utter futility of such rea- 
soning. Free competition in the labor ma rket, 
in so f ar as i t implies individual bargaining in 
wage contracting, is certain to leave the wor k- 
i ngman, in the m ore easily recruited occupa- 
ti ons, in receipt oT wages barely sufficient to 
main t ain a decent^ li velih ood. No amount of 
thrift or foresight will here provide for the 
" rainy day," because there is literally nothing 
that can be so set aside — save, indeed, at the 
cost of harmful deprivation. Under such con- 
ditions of low wages or irregular employment, 
life is at best a hard, unremitting struggle. 
When to it come the misfortunes of accident 
or of illness and the inevitable infirmities of old 
age, there is no recourse but desperate, unavail- 
ing resistance and ultimate poverty. 

For this form of industrial maladjustment, 
modern trade-unionism is at most a pallia- 



tiv& Theoretically, its devices — mutual 
insurance and collective bargaining — can se- 



96 THE ABOLITION OF POVERTY 

cure for all wage-earners adequate provision 
against disability. Practically, a great body of 
toilers lack the possibility of such achievement. 
This is the lesson of a century of trade-union 
history in England and the United States. In 
certain trades — in consequence of the nature 
of the industry, the quality of the workmen, 
sometimes even of more subtle elements of en- 
vironment and leadership — a powerful and 
militant unionism is possible. In other trades, 
attempts at organization seem doomed to re- 
sult, not once, but over and over again, in loose 
and feeble combinations galvanized from time 
to time into efficiency, but utterly lacking in 
that cohesiveness and endurance necessary for 
successful industrial contest. Finally, over a 
considerable part of the labor field, comprising 
the parasitic trades, recruited from the unskilled, 
the overcrowded, and the under-employed, 
unionism has never been nor is likely soon to 
be even attempted. 

y For this semi-submerged body of toilers, state 
intervention, in the form of decasualization, 
deconcentration, and minimum wage legisla- 
tion, must be invoked to secure even an imme- 
diately sufficient wage. The requirements of 
disability, invalidity, and old age must be met 
from another quarter. Even were the newly 
constituted wage level high enough to permit 



THE UNEMPLOYABLE 97 

deliberate provision for such disability, the very 
class defects — physical and mental — which 
make such intervention necessary preclude the 
possibility of self-help. Thus, both for a great 
body of wage-earners potentially organizable 
but in reality uncertain and unstable, and for 
the still greater body of toilers for whom such 
combination is in any reasonable sense hopeless, 
there is need of systematic provision against 
fortuitous and calculable disability, if the advent 
of poverty is to be averted. 

This condition has led the industrial states of 
our day to consider, and, to an increasing extent, 
to adopt, systems of compulsory state insurance 
against industrial accident, sickness, and old 
age. The primacy, as to origin and scope, in 
the matter of such social insurance belongs to 
Germany. Projected thirty years ago along rela- 
tively simple lines as a tentative device to com- 
bat the rising strength of socialism, German 
compulsory state insurance against accidents, 
sickness and infirmity, and old age has been ex- 
tended and developed step by step until it now 
constitutes a veritable " social charter of labour." 
The example of Germany has been followed by 
or has influenced other industrial states. Of 
these, Great Britain is the most recent, and in 
some respects the most interesting convert, 
whereas, as in so many other movements toward 



98 THE ABOLITION OF POVERTY 

social betterment, the United States has been 
conspicuously laggard. 

The most urgent form of such social provision 
is adequate insurance against industrial acci- 
dent. In the United States there are each year 
probably not less than 30,000 fatal and 400,000 
grave industrial accidents — the latter entailing 
complete disability for short, and partial disa- 
bility for protracted, periods. 91 Every such acci- 
dent leaves in its wake a degree of misery rang- 
ing from the strain of temporary wage losses to 
the complete dependence of unprovided widows 
and children. Moreover, this social distress is 
cumulative in amount, being at any given time 
the total of a preceding term of years. The legal 
remedy for industrial accident, centering about 
the principle of employer's liability, has been 
notoriously inadequate to meet this require- 
ment. The so-called defenses which the common 
law has evolved upon the idea of tort or wrong — 
assumption of risks, contributory negligence, 
and co-employee's fault — have in actual prac- 
tice left a vast majority of the accidents alto- 
gether uncompensated, or has awarded small 
and disproportionate compensation, and then 
only after considerable lapse of time and expen- 
sive legal processes. In lieu of this an adequate 
system of social insurance definitely annuls the 
legal doctrines of fault and automatically pro- 



THE UNEMPLOYABLE 99 

vides for every industrial accident in any form 
of employment sufficient compensation to main- 
tain a decent standard of life for the sufferer or 
for those dependent upon his earnings during 
the entire period of disability or dependence. 
The cost of such provision is borne, in the first 
instance, by the employer, but finds ultimate 
incidence as an element in the cost of production 
upon society in general. 

Remarkable as has been the progress of the 
compensation movement in the United States 
in the last five years, only a beginning has been 
made. 92 Some twenty States have enacted such 
legislation and the roster is rapidly lengthening. 
But in content the exhibit is more encouraging 
as to the future than adequate as to the present. 
Limitation as to employments, traces of the 
fault principle, inadequate scales of compensa- 
tion, delay in initial payment, insufficient medi- 
cal and surgical provision, are characteristic 
features of American legislation. On the other 
hand, no phase of social betterment is struggling 
more successfully to a higher level. With that 
imitative yet progressive spirit in social legis- 
lation which is one redeeming feature of our 
coordinated political system, each new aspirant 
Commonwealth starts from the plane already 
attained. There are likely to be frequent defeat 
and occasional recession, but adequate compen- 



ioo THE ABOLITION OF POVERTY 

sation both in amount and in term is even now 
a definitely established goal in every progressive 
State of the Union. 

Disease and sickness are causes of poverty 
to an even greater degree than industrial acci- 
dent. Abrupt illness, severe wage losses, inad- 
equate medical treatment, insufficient convales- 
cence, chronic morbidity form a disaster-bring- 
ing sequence familiar to all social workers. Such 
scanty statistics as we have suggest that from 
forty to fifty per cent of the working population 
are annually affected by illness, and that nearly 
one third of those receiving relief from public 
charitable institutions have been brought to 
this pass by sickness. 93 Some part of this quota 
represents the normal liability of mankind to 
sickness. But a considerable part is distinctly 
industrial and social in character — occupa- 
tional disease and physical under- vitalization. 
From whatever source proceeding it is vitally 
important, in the social interest, that the sick- 
ness of wage-earners receive adequate remedial 
treatment. This is dictated not only by con- 
siderations of economic conservation, but by 
the grave danger of ensuing disability and de- 
pendence. 

Various devices have been developed or util- 
ized by workingmen themselves for meeting the 
economic strain of sickness, beyond the provi- 






THE UNEMPLOYABLE 101 

sion which personal thrift and foresight are able 
to supply. Beneficiary features of trade-unions, 
friendly societies, establishment funds, fraternal 
orders, and industrial insurance companies rep- 
resent the endeavor which wage-earners make 
to avert the misery and ruin of sickness and 
disease. In many countries such agencies have 
received governmental recognition, at first by 
supervision and control, thereafter by subven- 
tion and aid. 

But voluntary provision, even when subsi- 
dized, offers no final solution. It obtains only 
among the better-paid classes of wage-earners 
and is weak where the need for it is relatively 
greatest. At best the aid which it renders is 
insufficient in amount and duration, and, worst 
of all, it imposes the cost too largely upon the 
wage-earner. To meet these essential require- 
ments, the most enlightened countries of the 
world have adopted or projected systems of 
compulsory insurance against sickness. Utiliz- 
ing existing voluntary agencies, such systems 
undertake, by joint contribution of employers, 
workmen, and the public treasury, to provide 
beneficiary payments for every wage-earner, in 
the event of sickness, for the entire period of 
disability and to an amount sufficient to main- 
tain the accustomed standard of life. 

The economic problem of old age grows out 



102 THE ABOLITION OF POVERTY 

of the certainty that a large proportion of the 
body of wage-earners find it sooner or later im- 
possible to secure employment because of failing 
efficiency. The pressure and tension of modern 
industrial processes bring on this " economic old 
age" even before physical infirmity has set in. 
From sixty years on it becomes increasingly 
difficult for the workman to retain his job. Dis- 
placed eventually, he finds partial or casual 
employment only to lose this in turn with de- 
clining competence. Thereafter accumulated 
savings or maintenance by children can alone 
ward off dependence. How unavailing are these 
last resources is apparent from the fact that out 
of the 3,949,524 persons in the United States in 
1 9 10 over the age of sixty-five, it has been esti- 
mated that approximately 1,250,000 or almost 
one third, are supported by public or private 
charity. 94 But the more serious aspect of the 
problem lies with the remaining two thirds. 
Therein are large bodies of men and women who 
have lived decent, useful lives and who now 
drag out their last years in want and penury — 
less acute only than the bitterness of outright 
dependence. Some idea of how large is this class 
may be formed from the fact that in Great Brit- 
ain some seventy-five per cent of the popula- 
tion over seventy years of age have qualified 
as in need of old-age relief; in France, nearly 



THE UNEMPLOYABLE 103 

fifty-seven per cent ; and in prosperous Australia, 
of those above sixty-five years of age, over forty 
per cent. Making the most liberal allowance for 
deception and fraud, the resulting exhibit is 
nevertheless an overwhelming evidence of old- 
age need. 

Voluntary old-age insurance, even when heav- 
ily subsidized by the state, fails to meet this 
requirement. Only a small proportion of the 
working-class population, and presumably the 
better-paid part, is attracted thereto, the per- 
centage of lapses is very large, and the protection 
actually acquired is " pitifully small." With the 
failure of voluntary insurance, two practicable 
methods of dealing with old-age need have been 
evolved — compulsory insurance and old-age pen- 
sions. The first system has been fully devel- 
oped in Germany, the second is best represented 
in Great Britain. Compulsory old-age insurance 
in its typical form provides for the payment to 
every wage-earner, whose income is less than a 
designated minimum, of a definite amount begin- 
ning at a certain age and continuing until death. 
The cost of the insurance is met by contributions 
of workers and employers in equal amount, 
supplemented by subsidies from the state treas- 
ury. Old-age pensions, on the other hand, rep- 
resent direct governmental provision of stipu- 
lated amounts to all adults above a certain age 



104 THE ABOLITION OF POVERTY 

not specifically disqualified, without contribu- 
tion by employer or employed, the entire cost 
being met by the public treasury. 

In the United States systematic provision for 
old age has hardly passed beyond the stage of 
intelligent discussion. The limited jurisdiction 
of industrially competing commonwealths adds 
to the difficulty of such provision by the States, 
whereas questions of constitutional power and 
political expediency complicate the question, 
viewed as a possible function of the Federal 
Government. As in the case of sickness insur- 
ance, the existing need is inadequately met by 
the superannuation benefits and old-age insurance 
of trade-unions, fraternal orders, industrial in- 
surance companies, the pension and retirement 
funds of industrial establishments, and the pen- 
sion provisions of state and municipal govern- 
ments in favor of public employees. 95 

A notable qualification of the foregoing is the 
significance of the national military pension 
system as a form of old-age provision. 96 It is a 
remarkable fact that over one half of the native 
white male population of the United States, over 
sixty-five years of age, were in 1910 receiving 
some form of federal pension. If the Southern 
States, where relatively few pensions are paid, 
be excluded, this proportion rises to nearly two 
thirds of the native white males* 



THE UNEMPLOYABLE 105 

There is only a rough adjustment between old- 
age dependence and pension eligibility. A very 
considerable part of those in receipt of pensions 
lie without the ranks of the aged poor, and, on 
the other hand, certain large categories from 
whom this class is largely recruited, are entirely 
excluded from the benefits of the pension sys- 
tem. The real significance lies in the fact that 
the United States has for nearly two generations 
been making generous expenditures — in 1912 
the cost of the pension system was $153,000,000, 
about three times as great as that of the British 
old-age pension system — which, even though 
originally inspired by other considerations, have 
as their actual consequence the relief of a mate- 
rial part of existing old-age dependence. Both 
in fiscal provision and in public preparedness, 
the way has been paved for a transition to a 
more comprehensive, a more equitable, and 
probably a more economical, system of old-age 
provision. 



CHAPTER VIII 

CONCLUSION 

The argument of the foregoing pages may now 
be briefly summarized: Poverty, as economic 
insufficiency, is to be distinguished from eco- 
nomic inequality and from economic dependence. 
Like other disorders that reduce social well- 
being, the failure of large classes in every modern 
community to secure enough to make possible 
decent existence is a positive condition conse- 
quent upon determinable causes. A notable 
service of economic investigation has been to 
ascertain the more important of these causes, 
and to set forth preventive and remedial devices. 

Modern economic organization provides a 
national dividend potentially large enough to 
obviate individual want. There is nothing inher- 
ent in competitive industry whereby this divi- 
dend need be so apportioned as to create great 
areas of poverty. The misdirections, not the 
normal working, of twentieth-century indus- 
trialism leave large elements of the community 
in receipt of incomes less than enough to main- 
tain, in the long run, decent, self-supporting 
existence for themselves and those necessarily 



CONCLUSION 107 

dependent upon them. These insufficiently pro- 
vided classes — the great supply-sources of pov- 
erty — arejthejunderpaid, the unemployed, the 
unemployable. 

Chronic miderpayment, arises from failure to 
substitute collective for individual bargaining 
in wage contracting, or from the excessive gains 
of enterprisers, or from the social undervaluation 
of product. Efficiently organized and intelli- 
gently directed trade-unionism will secure for 
the worker at least that part of the product of 
industry which free competition tends to award 
him. In so far as groups of wage-earners are 
unorganizable, or to the extent that industries 
or subdivisions of industries are parasitic, the 
state must intervene to define minimum wage 
conditions. Unemployment, understood as the 
involuntary idleness of competent workmen, is 
the result of cyclical depression, of ^seasonal 
fluctuation, and of the disposition of modern 
enterprisers to supply themselves with a reserve 
fund of irregularly employed labor available in 
seasons of exceptional activity. Here, labor 
exchanges, compulsory technical training, resi- 
dential decentralization, and unemployment 
insurance will aid the workmen in escaping the 
physical and moral retrogression that comes 
swiftly with recurring unemployment. Finally, 
for the great residuum of unemployables, become 



108 THE ABOLITION OF POVERTY 

so through industrial accident, sickness, or old 
age, a comprehensive system of social insurance 
must form the main line of attack. 

There are three possible grounds of dissent 
from the foregoing programme of economic bet- 
terment. It may be contended (i) that the meas- 
ures proposed will severally fail even as to the 
specific ends in view, to say nothing of the larger 
aim; or (2) that, while effective in immediate 
purpose, such measures are mischievous in their 
final consequence ; or (3) that poverty results in 
the main from other causes than those examined, 
so that in any event social misery would remain. 

As to the adequacy of the respective remedies 
proposed in correction of underpayment, unem- 
ployment, and disability, the case rests to con- 
siderable extent upon positive evidence. The 
history of labor organization in modern industrial 
states makes clear that, whatever be its ultimate 
social or moral consequences, the direct economic 
effect of efficient trade-unionism is to prevent 
underpayment. The facts relating to minimum 
wage legislation are too recent to justify as defin- 
ite a conclusion, but such evidence as is available 
indicates that legal enactment can secure a decent 
wage for the unorganizable and the exploited. 
The organization of the labor market by labor 
exchanges, measures of decasualization and 
unemployment insurance, as a corrective of un- 



CONCLUSION 109 

employment, have been undertaken in Great 
Britain after a thoroughgoing investigation of 
the whole problem of involuntary idleness. Fin- 
ally, more or less comprehensive systems of social 
insurance against disability, sickness, and old age 
are in operation in practically every industrial 
community of the world except the United States. 

There may be dissent, in the second place, as 
to the social desirability of the measures pro- 
posed, having in mind ultimate effect rather 
than immediate consequence. It is difficult to 
meet this comfortable inversion of the burden 
of proof. Economic analysis can determine the 
causes of economic disorder and formulate speci- 
fic remedial devices. It cannot demonstrate their 
aggregate efficacy. That convincing verification 
by qualified or composite experiment, whereby 
the pathologist establishes the validity of his 
result up to the point of absolute conclusiveness, 
is denied the political economist. In default of 
experimental proof the credential of any social 
proposal is its reasonableness. 

It is, however, difficult to find any trace of 
social menace in what has been suggested. Such 
conceivable possibilities as the invasion of per- 
sonal freedom through trade-unionism, the undue 
extension of state activities in the correction of 
unemployment, the sapping of individual thrift 
by social insurance, or the replacement of natural 



no THE ABOLITION OF POVERTY 

by artificial selection in social evolution are not 
likely to disturb the thoughtful. With the passing 
of the old laissez-faire philosophy in politics and 
in economics has gone the tyranny of " natural 
liberty/ ' Two generations of industrial regula- 
tion have developed a new sympathy for con- 
structive opportunism in social reform. Society 
has lost its terror of the old bogies. Given an 
urgent social evil and a reasonably direct remedy, 
there is little chance of inaction from fear of 
a remote, vaguely defined, and hypothetically 
established social injury. The public mind has 
come, more or less explicitly, to believe that 
so large are the powers of social adaptation, so 
recuperative is the course of economic readjust- 
ment that the correction of specific ills is likely 
to result in ultimate general gain. 

There need likewise be no serious concern as to a 
possible conflict between such social provision, 
on the one hand, and the implications of the 
modern common law or the prevailing concepts 
of individual justice, on the other hand. Law 
and justice are designed to realize maximum 
well-being. If existing devices fail in securing 
this end in certain directions, society adopts sup- 
plementary and amendatory measures. Such 
changes are not to be made lightly; the more 
radical their character, the more pronounced the 
burden of proof and the more exacting the test 



CONCLUSION in 

of acceptability. But incongruities between 
tested proposals and prevailing legal concepts 
of themselves constitute no impasse. Here, as 
so often before in the course of social progress, 
if conflicts arise there will be "a change in the 
existing common law either by legislation or by 
judicial decisions/ ' and a less tangible revision 
of the current conceptions of individual justice 
in the particular relationship affected. 97 

The direct economic cost of such interven- 
tion, in the form of heavier taxation and, more 
problematically, of increased commodity prices 
and reduced profits, may not be ignored. An 
obvious credit against this charge is the pres- 
ent social burden — in part recorded, in much 
greater degree unrecorded — of existing poverty. 
The net addition represents that moderate re- 
adjustment of individual wealth, in the form of 
property rights and surplus incomes, which col- 
lective well-being demands. In the light of eco- 
nomic history, there is no reason for apprehend- 
ing that such heavier imposition will arrest the 
increase of capital. Indeed, in averting reaction- 
ary radicalism, in enhancing social weal, in en- 
larging general consuming power, such public 
expenditure is likely to prove productive both 
as to the state and the individual. 

There may be dissent on the score that the 
foregoing analysis does not take account of all 



ii2 THE ABOLITION OF POVERTY 

the causes of poverty. At best this is a charge 
of exaggeration rather than of error. It has not 
been maintained that the correction of underpay- 
ment, unemployment, and disability will effect 
such complete and immediate elimination of 
misery that the persistence or reappearance of 
even a modicum thereof is to be accounted proof 
of failure. This is the apparent magic of chemical 
reaction, not the working of social change. Even 
the most confident triumphs of that most con- 
fident of the sciences having to do with human life 
— the theory and practice of medicine — defers 
to this necessity. Since Jenner's time, the effect 
of vaccination as a complete protection against 
smallpox has been declared and recognized with 
virtual finality. But despite this, no country — 
not even of highly civilized rank — has been or 
is anything like free from the scourge. In the 
United States alone, during 191 1, 21,767 cases 
were reported to the United States Public Health 
Service, the area covered being only a portion 
of the United States and the computation being 
in other respects an underestimate. 98 So, too, 
even though the causes of poverty may have 
been unerringly determined and the means of pre- 
vention explicitly set forth, there will be no instant 
cessation. Arrest of increase, prevention of spread, 
treatment at the source, — all this rather than 
outright suppression are what will come to pass. 



CONCLUSION 113 

Even more, economic relations are too intri- 
cate, economic analyses are too qualified, ever 
to justify doctrinaire certainty in any large social 
interpretation. It may very well be that with 
more perfect acquaintance with the social or- 
ganism and its diseases will come disclosure of 
other forces than those now isolated directly 
responsible for economic want. The economist 
will study these as they present themselves and 
search for preventive devices. But such possi- 
bilities should not check present activity. At this 
juncture, an analysis of poverty discloses certain 
definite causes. If we devote ourselves to the 
prevention of these, and continue to investigate 
and to study, the future can with reasonable 
assurance be left to work out its own problems. 

The programme of economic betterment here 
outlined is neither easy nor quick of attainment. 
But tested by accepted economic philosophy, it 
is practicable — and worth while. From the 
days of Plato, social optimists have described 
ideal commonwealths wherein there was no want. 
Such Utopias were fashioned as fantasies or as 
satires. Now, in our own day, the conquest 
of poverty looms up as an economic possibility, 
definitely within reach — if only society desire 
it sufficiently and will pay enough to achieve it. 



NOTES 

1. Adam Smith, An Inquiry into the Nature and Causes 
of the Wealth of Nations (London, 1776), Introduc- 
tion. 

2. Alfred Marshall, Principles of Economics, sixth 
edition (London, 19 10), pp. 2-3. 

3. Robert Hunter, Poverty (New York, 1904), pp. 7, 60- 

61, 337- 

4. A. L. Bowley, "Working-Class Households in Read- 
ing," in Journal of the Royal Statistical Society, June, 

1913. 

5. F. H. StreightofT, "The Distribution of Incomes 
in the United States," in Columbia University Stud- 
ies in History, Economics, and Public Law, vol. 
Lil, no. 2, p. 139. Professor Scott Nearing's esti- 
mates are materially lower ; see Wages in the United 
States, 1008-iQio (New York, 191 1), pp. 213-15. 

6. Report of the Special Committee on Standard of 
Living in Eighth New York State Conference of 
Charities and Correction, Albany, November 12- 
14, 1907; in R. C. Chapin, The Standard of Living 
among Workingmen's Families in New York City 
(New York, 1909), pp. 263-82. Professor Chapin's 
review of the same data leads to the less favorable 
conclusion that an income of $900 is needed to main- 

<*■ tain a normal physical standard, ibid., p. 246. 

7. Report of Special Committee of Investigation, ap- 
pointed by the Commission on the Church and Social 
Service of the Federal Council of the Churches of 
Christ in America, concerning the Industrial Situa- 
tion at South Bethlehem, Pa, (New York, 1910), 
p. 18. 



n6 NOTES 

8. Chapin, op. cit., p. 241. 

9. Bulletin of the United States Bureau of Labor Statis- 
tics, whole number 140 (Washington, 1914), p. 11. 

10. Bulletin of the United States Bureau of Labor Statis- 
tics, whole number 143 (Washington, 19 14), pp. 
7-8. m 

11. Chapin, op. cit., pp. 2-4. 

12. Ibid., p. 60. 

13. C. S. Loch, " Charity," in Encyclopedia Britan- 
nica, eleventh edition (Cambridge, 1910); E. T. 
Devine, Misery and its Causes (New York, 19 12), 
pp. 7-9. 

14. W. E. H. Lecky, History of European Morals from 
Augustus to Charlemagne, third edition (New York, 
1890), vol. 1, p. 93. 

15. V. G. Simkhovitch, Marxism versus Socialism (New 
York, 1913), p. 98. 

16. Progress and Poverty (New York, 1880), pp. 7, 9. 

17. Social Statics (1851); quoted and reaffirmed in 
The Man versus the State (New York, 1888), 
pp. 67-68. 

18. A. E. Hake and O. E. Wesslau, The Coming Indi- 
vidualism (London, 1895), p. 11. 

19. Simkhovitch, op. cit., p. 124. 

20. T. H. Huxley, " Administrative Nihilism' ' (1871), 
in Method and Results (New York, 1898), p. 28. 

21. "Government: Anarchy or Regimentation" (1890) 
in ibid., p. 391. 

22. Principles of Economics, p. 3 ; Devine, op. cit., p. 265. 

23. James Bonar, Parson Malthus (Edinburgh, 1881), 
p. 5; see also the valuable study, by the same au- 
thor, of Malthus and his Work (London, 1885). 

24. An Essay on the Principle of Population, as it affects 
the Future Improvement of Society (London, 1798), 
pp. 14-17. 



NOTES 117 

25. Herbert Spencer, The Principles of Biology, part vi, 
chap, xiii, sec. 375 ; in Appleton reprint (New York, 
1898), vol. 11, p. 506. 

26. Sight must not be lost of the tremendous possi- 
bilities of increasing food-supply by reducing losses 
from disease. To take a single example: the losses 
of swine in the United States in 19 13, in the main 
from hog cholera, were 119 per 1000 head. This 
meant a loss of nearly 800,000,000 pounds of dressed 
meat and lard, sufficient to furnish every family of 
the United States, averaging four and a half per- 
sons, about forty pounds. The Bureau of Statis- 
tics of the United States Department of Agricul- 
ture declares that "If there had been no such loss, 
probably increasing scarcity of meat would have 
been largely prevented." {Farmers 1 Bulletin, no. 
590, April 23, 1914, p. 2). 

27. Crop Reporter, published by authority of the Secre- 
tary of Agriculture, vol. xiv,pp. 30-3i(April, 1912). 

28. Poverty: A Study of Town Life (i6mo, reprint), p. 
361. 

29. Political Economy, third edition (London and Glas- 
gow, 1854), p. 86. _ 

30. Principles of Political Economy, with some of their 
Applications to Social Philosophy, book iv, chap. 
II, sec. 2; in People's edition (London, 1865), p. 426. 

31. An Inquiry into the Nature and Causes of the Wealth 
of Nations, book 1, chap, vni; ed. Cannan (London 
and New York, 1904), pp. 65, 75. 

32. Essays in Finance, second series (London, 1886), 

P- 333- 

33. W. H. Beveridge, Unemployment: A Problem of In- 
dustry, third edition (London, 19 12), p. 7. 

34. Thoughts on Political Economy (Baltimore, 1820), 
P- 273. 



n8 NOTES 

35. Essay on the Rate of Wages (Philadelphia, 1835), 
pp. 244-45. 

36. Raymond, op. cit., pp. 266-67. 

37. Twelfth Census of the United States, 1900, vol. 
VI, "Agriculture," part III (Washington, 1902), 
pp. 64-65. 

38. Computed from Statistical Abstract of the United 
States, 1 91 2 (Washington, 19 13), pp. 745-776. 

39. Ibid., pp. 762-63, 773-74- 

40. Thirteenth Census of the United States, 19 10, vol. 
V, " Agriculture, 1909-10" (Washington, 1913), 
PP. 536, 565. 

41. Statistical Abstract of the United States, 191 2 (Wash- 
ington, 19 1 3), p. 738; Bulletin no. 122 of the Bureau 
of the Census, Estimates of Population, 1910-14 
(Washington, 19 14) ; I. M. Rubinow, Social Insur- 
ance, with Special Reference to American Conditions 
(Washington, 19 13), p. 490. 

42. Simkhovitch, op. cit., p. 145. 

43. Hake and Wesslau, op. cit., p. 30. 

44. Evidence before Lords' Committee on Apprentices 
and Others Employed in Mills and Factories; with 
Appendix. Three parts (London, 18 18), pp. 182-83, 
189. 

45. Letters on the Factory Act, as it affects the Cotton 
Manufacture (London, 1837), pp. 14-16. 

46. Money answers all Things (London, 1734); ed. Hol- 
lander (Baltimore, 1914), p. 159. 

47. Principles of Political Economy, book II, chap. I, 
sec. 1; People's edition, p. 123. 

48. The Quintessence of Socialism, chap, in; trans. 
Bosanquet (New York, n.d.), pp. 28-29. 

49. Principles of Political Economy, Book 11, chap. I, 
sec. 3; People's edition, p. 128. 

50. Rev. Hastings Rashdell, "The Philosophical Theory 



NOTES 119 

of Property,' ' in Property, its Duties and Rights 
(London, 1913), p. 64. 

51. Gerard De Malynes, A Treatise of the Canker of 
England's Commonwealth (London, 1601). 

52. E. T. Devine, Efficiency and Relief: A Programme 
of Social Work (New York, 1906), p. 13. 

53. David Ricardo, On the Principles of Political Econ- 
omy and Taxation, second edition (London, 18 19), 

p. 95- 

54. Report of the Board of Arbitration in the Matter of 
the Controversy between the Eastern Railroads and 
the Brotherhood of Locomotive Engineers, Novem- 
ber 2, 1913 (n.p., n.d.), p. 47. 

55. Report of the Commission of the Minimum Wage 
Boards, January, 1912 (Boston, 1912), p. 18. 

56. An Inquiry into the Nature and Causes of the Wealth 
of Nations, book 1, chap, vni; ed. Cannan, vol. I, 
p. 68. 

57. Sidney and Beatrice Webb, Industrial Democracy 
(London, 1897), part ill, chap. I. 

58. G. E. Barnett, "The Introduction of the Linotype," 
in The Yale Review, vol. xiii, November, 1904. 

59. G. E. Barnett, "The Dominance of the National 
Union in American Trade-Union Organization," 
in Quarterly Journal of Economics, May, 19 13, 

P. 465- 

60. Twelfth Census of the United States, 1900, "Special 
Report on Occupations" (Washington, 1904), pp. 
1-lii; I. A. Hourwich, "The Social-Economic 
Classes of the Population of the United States" 
in Journal of Political Economy, March, 191 1; 
Rubinow, Social Insurance, p. 29. 

61. L. H. Haney, "Organized Labor and the Recent 
Advance in Prices," in Quarterly Publications of the 
American Statistical Association, June, 19 10, p. 154. 



120 NOTES 

62. J. Laurence Laughlin, "The Monopoly of Labor," 
in Atlantic Monthly, October, 191 3, p. 449. Cf. 
also Victor Morawetz, Income of the Nation and 
Dividends of the Masses (New York, n.d.), re- 
printed from New York Sunday Sun, December 21, 
1913, pp. 8-12. 

63. G. E. Barnett, "The Printers: A Study in Ameri- 
can Trade-Unionism," in American Economic As- 
sociation Quarterly, third series, vol. x, no. 3, pp. 

185-89. 

64. F. E. Wolfe, "Admission to American Trade- 
Unions," in Johns Hopkins University Studies in 
Historical and Political Science, series xxx, no. 3, 
pp. 25-28. 

65. Haney, op. cit., p. 164. 

66. I have obtained valuable aid as to the problem of 
the organizability of labor from Mr. W. O. Wey- 
forth, Jr., fellow in political economy in the Johns 
Hopkins University, who is engaged upon a de- 
tailed study of this important phase of the labor 
question. 

67. A. C. Pigou, "The Principle of the Minimum 
Wage," in The Nineteenth Century, March, 19 13. 

68. D. A. McCabe, "The Standard Rate in American 
Trade-Unions," in Johns Hopkins University Stud- 
ies in Historical and Political Science, series xxx, 
no. 2, pp. 105-06. 

69. The Minimum Wage Commission Bill of the Con- 
sumers' League of Maryland, 19 14, section 64. 

70. "The Minimum Wage," in Atlantic Monthly, Sep- 
tember, 19 1 3. 

71. Memoranda of the Board of Trade in Reference to 
the Working of the Trade Boards Act (1909), May 
27, 1913 (London, 1913). 

72. Special Report from the Select Committee on the 



NOTES 121 

Trade Boards Act Provisional Orders Bill; together 
with the Proceedings of the Committee and the Min- 
utes of Evidence (London, 19 13). 

73. R. H. Tawney, "Inaugural Lecture as Director 
of the Ratan Tata Foundation, University of Lon- 
don," October 22, 1913, in Memoranda on Prob- 
lems of Poverty, no. 11 (London, n.d.), p. 16. 

74. Stettler vs. Industrial Welfare Commission of the 
State of Oregon, in the Supreme Court of the 
State of Oregon, October Term, 1913: Appendix 
to the briefs filed in behalf of respondents, pre- 
pared by Louis D. Brandeis, assisted by Josephine 
Goldmark. 

75. Ibid., p. 40. See also Report of the Welfare Depart- 
ment of the National Civic Federation, on "Work- 
ing Conditions in New York Stores," in National 
Civic Federation Review, July 15, 19 13. 

76. Dissenting opinion of Mr. Justice Holmes in Loch- 
ner vs. New York, 198 U.S. 45, at 76. 

77. A. M. Holcombe, "The Legal Minimum Wage in 
the United States," in the American Economic 
Review, March, 19 12, p. 29. 

78. H. R. Seager, Social Insurance: A Programme of 
Social Reform (New York, 19 10), p. 84; also Ameri- 
can Labor Legislation Review, May, 19 14, with 
useful "Select Bibliography on Unemployment," 
pp. 403-20. 

79. Beveridge, op. cit., p. 27. 

80. Report of Massachusetts Bureau of Statistics of 
Labor (19 13), part ill, pp. 31-32; Thirteenth Cen- 
sus of the United States, 1910, vol. vm, "Manu- 
factures, 1909 " (Washington, 19 13), p. 57. 

81. Bulletin of the Department of Labor of State of New 
York, no. 54 (March, 1913), pp. 6-7; Census vol- 
ume as in preceding note. 



122 NOTES 

82. B. S. Rowntree and B. Lasker, Unemployment: A 
Social Study (London, 191 1), pp. 301-04. 

83. Ibid., p. 310. 

84. Beveridge, op. cit., p. 9. 

85. Ibid. j pp. 68-69. 

86. Ibid., p. 100. 

87. Ibid., pp. 197-98. 

88. Rowntree and Lasker, op. cit., pp. 105-10. 

89. First Report of the Proceedings of the Board of Trade 
under Part II of the National Insurance Act, iqii, 
with appendices: presented to both Houses of 
Parliament (London, 19 13). 

90. Beveridge, op. cit., p. 268. 

91. Rubinow, op. cit., p. 68. 

92. Bulletin of the United States Department of Labor 
Statistics, whole number 126, "Workmen's Com- 
pensation Laws of the United States and Foreign 
Countries" (Washington, 1914). 

93. Rubinow, op. cit., pp. 155-202. 

94. Ibid., p. 310; quoting L. W. Squier, Old- Age De- 
pendency in the United States (New York, 19 12). 

95. L. W. Squier, op. cit., part ill. 

96. Rubinow, op. cit., pp. 404-09. 

97. Jeremiah Smith, " Sequel to Workmen's Compen- 
sation Acts," in Harvard Law Review, January and 
February, 1914. 

98. Annual Report of the Surgeon-General of the Public 
Health Service of the United States, IQ12 (Washing- 
ton, 1913), p. 187. 



LIBRARY OF CONGRESS 



027 292 811 3 



